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The United Arab Emirates (UAE), which implemented a comprehensive free trade agreement with India last May, has become India’s fourth-biggest investor in 2022-23, according to government data.
The United Arab Emirates (UAE), which implemented a comprehensive free trade agreement with India last May, has become India’s fourth-biggest investor in 2022-23, according to government data.
UAE foreign direct investment (FDI) in India more than tripled to $3.35 billion in 2021-22 from $1.03 billion in 2021-22, data from the Department for Promotion of Industry and Internal Trade (DPIIT) showed.
UAE foreign direct investment (FDI) in India more than tripled to $3.35 billion in 2021-22 from $1.03 billion in 2021-22, data from the Department for Promotion of Industry and Internal Trade (DPIIT) showed.
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The UAE is the fourth largest investor in India in 2022-23, compared to seventh in 2021-22. Singapore was the largest investor in India with US$17.2 billion in FY23, followed by Mauritius (US$6.1 billion) and the US (US$6 billion).
“The rapid strengthening of bilateral relations and investment cooperation between India and the United Arab Emirates (UAE) is mainly attributable to strong bilateral relations between India and the UAE, growth in investment commitments in the UAE, and policy reforms to further simplify doing business between the two countries,” said Shardul Amarchand Mangaldas & Co Partner Rudra Kumar Pandey said.
UAE investments in India are mainly concentrated in sectors such as services, shipping, power and construction activities. Pandey added that one of the key factors for increasing foreign direct investment (FDI) in the UAE is the signing of the Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE on February 18, 2022 (effective from May 1, 2022). take effect).
“Apart from CEPA, another growth engine for UAE FDI in India is the UAE’s investment commitment. The UAE has pledged to invest $75 billion over a period of time in India’s infrastructure sector. It has also committed to partnering with India in the renewable energy sector,” Pandey said. pointed out.
India and the UAE have implemented a comprehensive free trade agreement since May 1 last year. According to the agreement, in addition to relaxing norms to promote investment, some goods of the two countries can enter each other’s market with zero tariffs.
The country accounted for about 2.5 percent of total foreign direct investment in India between April 2000 and March 2023, the data showed. During the period, India attracted overseas capital inflows worth $15.6 billion from the UAE.
According to experts, the trade agreement has helped to significantly increase imports and exports between the two countries, thereby increasing UAE investment in Indian companies.
Anindya Ghosh, partner at IndusLaw, said: “India’s continuous relaxation of foreign direct investment policies has also facilitated such investments. Similarly, we have also seen several Indian startups exploring expansion in the UAE.”
Among other agencies, Abu Dhabi Investment Office, through its innovation programme, provides positive incentives for innovation-driven start-ups through financial and non-financial incentives such as information on data, networking, licensing, logistics, real estate, visas, etc., she said. support.
Ghosh added, “Such expansion ideas/activity by Indian startups has also motivated investment funds in the UAE to invest more in innovative startups in India.”
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