According to recently released government data, the United Arab Emirates (UAE) has become the fourth-largest investor in India during the fiscal year 2022-23.
Foreign direct investment (FDI) from the UAE to India experienced an impressive surge, jumping over three-fold from USD 1.03 billion in 2021-22 to USD 3.35 billion in the last fiscal year.
The data provided by the Department for Promotion of Industry and Internal Trade (DPIIT) highlights the rapidly strengthening bilateral ties and investment cooperation between India and the UAE. The UAE’s ascent to the fourth-largest investor position can be attributed to various factors, including the robust bilateral relations between the two countries, increased investment commitments from the UAE and policy reforms aimed at easing business operations.
Singapore secured the top spot as the largest investor in India for the fiscal year 2022-23, with a substantial investment of USD 17.2 billion. It was followed by Mauritius, which invested USD 6.1 billion, and the United States, with an investment of USD 6 billion.
UAE investments in India primarily focus on sectors such as services, sea transport, power and construction activities. A significant factor contributing to the increase in FDI from the UAE is the signing of the Comprehensive Economic Partnership Agreement (CEPA) between the two nations, which came into effect on 1 May 2022. Additionally, the UAE has committed to investing USD 75 billion in India’s infrastructure sector over time and partnering with India in the renewable energy sector.
The implementation of a comprehensive free trade agreement between India and the UAE since May 2022 has played a vital role in boosting import-export activities and subsequently attracting more investments from the UAE into Indian companies. Furthermore, India’s ongoing liberalisation of its FDI policy has also acted as a catalyst for increased investments.
The data reveals that the UAE accounts for about 2.5 per cent of the total FDI India has received between April 2000 and March 2023, with a cumulative inflow of USD 15.6 billion from the UAE during this period.