UAE becomes the fourth-largest investor in India, with $3.35 billion in FDI for FY 2022-23

By siliconindia  |  Tuesday, 13 June 2023, 09:50 IST

UAE becomes the fourth-largest investor in India, with $3.35 billion in FDI for FY 2022-23
According to recent government data, the United Arab Emirates (UAE), which entered into a comprehensive free trade agreement with India of the previous year, has become the fourth-largest investor in India for the fiscal year 2022-23. The data from the Department for Promotion of Industry and Internal Trade (DPIIT) reveals a significant increase in foreign direct investment (FDI) from the UAE to India, jumping over three-fold from USD 1.03 billion in 2021-22 to USD 3.35 billion. This surge has propelled the UAE from its previous seventh position to its current fourth position among investors in India.
In the fiscal year 2022-23, Singapore emerged as the leading investor in India, with a substantial investment of USD 17.2 billion. Following Singapore, Mauritius secured the second position with an investment of USD 6.1 billion, while the United States came in third with USD 6 billion.
“The rapidly strengthening of bilateral ties and investment cooperation between India and United Arab Emirates (UAE) can be chiefly attributed to the strong bilateral relations between India and UAE, growth in investment commitments from UAE, and the policy reforms to further ease of doing businesses between the two countries,” Rudra Kumar Pandey, Partner, Shardul Amarchand Mangaldas & Co, said.
The signing of the Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates (UAE) on February 18, 2022, has been identified as a key driver for the rise in foreign direct investment (FDI) from the UAE. The agreement, which became effective from May 1, 2022, has played a significant role in facilitating this increase, according to Pandey.
“Apart from CEPA, another growth engine of FDI from UAE in India is the investment commitment from UAE. UAE has committed to invest USD 75 billion in the Indian infrastructure sector over a period of time. It has also committed to partner with India in the renewable energy sector,” Pandey noted.
Since May 1 of the previous year, India and the UAE have implemented a comprehensive free trade agreement that has now become operational. This agreement has resulted in zero-duty access for various goods from both countries to each other’s markets, along with relaxed regulations aimed at promoting investments. The data indicates that the UAE’s foreign direct investment (FDI) accounts for approximately 2.5% of the total FDI received by India from April 2000 to March 2023. Over this period, India has successfully attracted USD 15.6 billion worth of overseas inflows from the UAE.
Experts have pointed out that the trade agreement between India and the UAE has played a crucial role in driving a substantial growth in imports, exports, and investments between the two nations. The agreement has facilitated a significant increase in investments from the UAE into Indian companies, benefiting both countries’ economies.
“India’s constant liberalisation of the FDI policy also boosted such investments. Similarly, we are also seeing that several Indian startups are exploring expansion in the UAE,” Anindya Ghosh, Partner, IndusLaw, said.
She said that among other agencies, Abu Dhabi Investment Office through their Innovation Program is providing active support to innovation-driven startups through financial and non-financial incentives like information on data, network, licensing, logistics, real estate, visa etc. “Such expansion ideas/ activities of Indian startups also provide an incentive to UAE-based investment funds to invest more in innovation-based startups in India,” Ghosh added.
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“Decentralized commerce has the potential to unlock new value in the global commerce ecosystem, so we are excited to partner with Outlier Ventures to support and engage with entrepreneurs building at the forefront of this technology on their path to scale,” Thomas Kang, vice president of Store No.8, said in a statement. 
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