According to government data, the United Arab Emirates (UAE), with which India implemented a comprehensive free trade agreement in May last year, has become the fourth largest investor in India during the fiscal year 2022-23. The data from the Department for Promotion of Industry and Internal Trade (DPIIT) revealed that foreign direct investment (FDI) from the UAE to India increased by over three times, reaching $3.35 billion compared to $1.03 billion in 2021-22.
UAE Jumps from 7Th to 4th Spot in Top Investors in India
In the 2022-23 fiscal year, the UAE ranked fourth among investors in India, a significant jump from seventh place in the previous year. Singapore took the top spot with an investment of $17.2 billion, followed by Mauritius ($6.1 billion) and the US ($6 billion).
Rudra Kumar Pandey, a partner at Shardul Amarchand Mangaldas & Co, attributed the strengthening of bilateral ties and investment cooperation between India and the UAE to their strong relations, increased investment commitments from the UAE, and policy reforms aimed at facilitating ease of doing business between the two countries. The UAE’s investments in India primarily focus on sectors such as services, sea transport, power, and construction activities.
Comprehensive Free Trade Agreement Between Two Countries
Pandey noted that 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 boosting FDI from the UAE. Additionally, the UAE has committed to investing $75 billion in India’s infrastructure sector over time and partnering with India in the renewable energy sector.
The operationalization of the comprehensive free trade agreement between India and the UAE since May 1, 2021, has facilitated zero-duty access for certain goods in both markets and eased norms for promoting investments. The UAE accounts for approximately 2.5% of the total FDI received by India between April 2000 and March 2023, amounting to $15.6 billion.
Experts believe that the trade agreement has significantly increased trade between the two countries, leading to higher investments from the UAE in Indian companies. India’s ongoing liberalization of FDI policies has also contributed to attracting such investments. Furthermore, Indian startups exploring expansion in the UAE and the support provided by agencies like the Abu Dhabi Investment Office through their Innovation Program have created incentives for UAE-based investment funds to invest more in innovation-driven startups in India.
