The UAE becomes the fourth largest investor in India, and its FDI will triple by 202223

According to recently released government data, the United Arab Emirates (UAE) has become the fourth largest investor in India in 2022-23.

Foreign direct investment (FDI) from the UAE to India has experienced an impressive surge, more than quadrupling from $1.03 billion in 2021-22 to $3.35 billion in the last fiscal.

Data provided by the Department of Promotion of Industry and Domestic Trade (DPIIT) highlights the rapidly strengthening bilateral relations and investment cooperation between India and the UAE. The UAE’s rise to the fourth-largest investor status can be attributed to a variety of factors, including robust bilateral relations between the two countries, the UAE’s increased investment commitments, and policy reforms aimed at streamlining business operations.

With a massive investment of US$17.2 billion, Singapore takes the top spot as India’s top investor in FY2022-23. It was followed by Mauritius with an investment of US$6.1 billion and the United States with an investment of US$6 billion.

UAE investments in India are mainly concentrated in sectors such as services, shipping, power and construction activities. An important factor contributing to the increase in FDI from the UAE is the signing of the Comprehensive Economic Partnership Agreement (CEPA) between the two countries, which will come into force on May 1, 2022. Additionally, the UAE has pledged to invest $75 billion over time in India’s infrastructure sector and to collaborate with India in the field of renewable energy.

The implementation of a comprehensive free trade agreement between India and the UAE since May 2022 has played a crucial role in boosting import and export activities and subsequently attracting more UAE investments into Indian companies. In addition, India’s ongoing FDI policy liberalization has also acted as a catalyst for increased investments.

Data show that between April 2000 and March 2023, the UAE accounted for about 2.5% of the total FDI received by India, with a cumulative inflow of $15.6 billion from the UAE during this period.