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India Gate (Delhi) and Burj Khalifa (Dubai) | Image for representational purposes only
United Arab Emirates (UAE) has emerged as the fourth largest investor in India during the fiscal year 2022-23, according to the latest government data. The UAE, with which India implemented a comprehensive free trade agreement in May last year, witnessed a remarkable surge in foreign direct investment (FDI) to the country.
According to Department for Promotion of Industry and Internal Trade (DPIIT) data, FDI from the UAE to India tripled from $1.03 billion in 2021-22 to $3.35 billion in 2022-23. This surge catapulted the UAE from its previous position as the seventh-largest investor in India to the fourth-largest.
Talking about Singapore, the country topped the list as the largest investor in India, with a substantial investment of $17.2 billion in FY23, followed by Mauritius ($6.1 billion) and the US ($6 billion).
It's worth noting that strengthening bilateral ties and investment cooperation between India and the UAE are the core reasons for the growth in investments.
From the sector's point of view, UAE majorly focused on industries such as services, sea transport, power, and construction activities. One of the primary factors driving the increase in FDI from the UAE is the signing of the Comprehensive Economic Partnership Agreement (CEPA) between the two countries on February 18, 2022, which came into effect on May 1, 2022.
Notably, Rudra Kumar Pandey, Partner at Shardul Amarchand Mangaldas & Co., said the UAE is committed to investing $75 billion in India's infrastructure sector and collaborating with India in the renewable energy sector.
India and the UAE have been operating under a comprehensive free trade agreement since May 1, 2022, which allows several goods from both countries to have zero-duty access to each other's markets and includes relaxed norms to promote investments. Over the period from April 2000 to March 2023, the UAE accounted for approximately 2.5% of India's total FDI, amounting to $15.6 billion.
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