June 12, 2023
In FY23, foreign direct investment (FDI) from the UAE to India surged over three-fold to US$ 3.35 billion from US$ 1.03 billion in 2021-22
The UAE's investments in India are focused on sectors such as services, sea transport, power, and construction activities
In 2021-22, the UAE was India’s seventh-largest investor
The UAE accounts for approximately 2.5% of the total FDI India has received between April 2000 and March 2023
The United Arab Emirates (UAE) has become the fourth-largest investor in India during FY23, according to data from the Department for Promotion of Industry and Internal Trade (DPIIT). In FY23, foreign direct investment (FDI) from the UAE to India surged over three-fold to US$ 3.35 billion from US$ 1.03 billion in 2021-22. Experts attributed the strengthening of bilateral ties and investment cooperation to the robust relations between the two countries, increased investment commitments from the UAE, and policy reforms to enhance the ease of doing business.
In 2021-22, the UAE was India’s seventh largest investor. Singapore topped the list as the largest investor with an investment of US$ 17.2 billion in FY23, followed by Mauritius (US$ 6.1 billion) and the United States (US$ 6 billion).
The UAE’s investments in India are primarily focused on sectors such as services, sea transport, power, and construction activities. The signing of the Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE on February 18, 2022 (effective from May 1, 2022), played a crucial role in the rise of FDI from the UAE. This agreement grants zero-duty access to certain goods from both countries in each other’s markets, along with relaxed norms to promote investments. Additionally, the UAE has committed to investing US$ 75 billion in India’s infrastructure sector and partnering with India in the renewable energy sector.
The UAE accounts for approximately 2.5% or US$ 15.6 billion of the total FDI India has received between April 2000 and March 2023.
Experts suggest that the trade agreement has significantly boosted import and export activities between the two countries, consequently leading to increased investments from the UAE in Indian companies. India’s ongoing liberalization of the FDI policy has also contributed to attracting such investments.
Furthermore, several Indian startups are exploring expansion opportunities in the UAE, which in turn incentivizes UAE-based investment funds to invest more in innovative startups in India. Agencies like the Abu Dhabi Investment Office, through their Innovation Program, actively support innovation-driven startups by offering financial and non-financial incentives related to data, networking, licensing, logistics, real estate, visas, and more.