For many years, the UAE and India have had a bilateral relationship, enclosing various areas involving trade, tourism, investment, etc. The UAE is the fourth largest investor in India in FY -2022-23, after the implementation of the free trade agreement in May by India. According to the Department of Promotion of Industry and Trade, the UAE’s contribution to the Indian system has increased three-fold to USD 3.35 billion from USD 1.03 billion in FY 2021.
The UAE has been rapidly increasing its investments in India in several industries, including technology, energy, logistics, and infrastructure. The strategic position of India, its sizable consumer market, and the possibility for significant returns on investment all play a role in these operations. India is viewed as a suitable investment location by the UAE because of its continuous economic improvements, highly trained labour force, and steady economic growth.
Economic Partnership
Recently, the UAE’s minister of economy H.E Bin Touq sat with Shri Piyush Goyal, Minister of Commerce, Industry, Consumer Affairs, Food & Public Distribution and Textiles, to formulate various plans and initiatives to strengthen and diversify the existing partnership between the two countries. By considering the adaptation of technology which will help in the contribution to the growth and development of markets of both the countries. This support will push the startups to grab various provided opportunities.
To promote the investment, these two countries have agreed to provide several goods that will be accessible in each other’s market at zero duty cost. This pact has resulted in a significant increase in imports as well as export, leading to an increase in the investment from UAE in Indian companies.
Key Investment sectors
The UAE focuses on diversifying their investment portfolio in India often by reducing dependency on oil revenue of their economy. The Indian market helps the UAE to achieve the goal by enabling them to leverage its financial resources and expertise in another sector, other than the traditional oil industry.
The UAE’s investments in India span a wide range of industries, demonstrating the breadth and depth of the two nations’ economic connections. Businesses with operations in the UAE have significantly increased their investments in infrastructure, especially in ports, airports, and logistics facilities. For instance, the National Investment and Infrastructure Fund (NIIF) of India received funding from the Abu Dhabi Investment Authority (ADIA) to boost infrastructure development activities.
At the meeting between H.E. Bin Touq and Shri G. Kishan Reddy, India’s Minister of Tourism and Culture, the issue of fostering investment exchanges in the tourism sector was addressed. Adopting innovative strategies to promote tourism between the two countries was also studied, along with increasing the number of flights between the two. In this regard, H.E. said, “We are prepared to strengthen our partnership with India to investigate more exciting opportunities in the tourism industry and build innovative tourism projects that fully use the potential of cutting-edge technology in hospitality services.” The two countries will gain popularity as tourist destinations as a result of the enhanced visitor experience.
ADIA Funds
The Abu Dhabi Investment Authority (ADIA), one of the biggest sovereign wealth funds in the world, is a significant example of UAE investments in India. ADIA has made large investments in several Indian enterprises, including those in the infrastructure, real estate, and renewable energy sectors. DP World, Lulu Group, and Emaar Properties are a few of the UAE-based businesses that have made significant investments in India, particularly in the retail and real estate industries. The governments of India and the UAE have made initiatives to improve collaboration and eliminate obstacles to encourage and strengthen these investment flows. To encourage business, protect investment, and reduce double taxation, they have signed bilateral agreements. These agreements seek to create an environment that is favourable to investors.
Examples of the UAE’s commitment to India include several well-known investment projects. Indian businesses like Jio Platforms, Byju’s, and Reliance Retail have greatly benefited from significant investments made by the UAE’s sovereign wealth funds, especially Mubadala Investment Company and ADIA. These investments demonstrate how optimistic the UAE is about India’s technical and digital industries.
The UAE-India Food Corridor, which aims to improve food security and agricultural collaboration, is another significant initiative. This project focuses on agricultural infrastructure, transportation, and food processing and entails strategic alliances between UAE and Indian businesses.
The potential impact of the investment
These investments in various sectors can positively affect the Indian economy. Increasing UAE investment in India may stimulate economic expansion and generate employment opportunities in both nations. These investments support information sharing, skill development, and technology transfer, all of which help India’s human capital grow. Additionally, the UAE’s investments help India’s infrastructure development plan as well as essential industries that promote innovation and economic diversity.
Conclusion
The UAE and India have shared ties historically as well as culturally which have helped in creating a bilateral relationship between both countries. This strategic partnership has resulted in fostering investment for sustainable development, mutual alliance, and overall economic development. The UAE’s broadening horizons and rising investments in India highlight the tight bilateral ties and closeness of the two countries’ aspirations for economic development. The UAE has established itself as a significant investor in India through strategic alliances, financial commitments to important sectors, and major projects. In the years to come, economic collaboration between the UAE and India has the potential to strengthen bilateral ties, improve the economies of both countries and encourage innovation.
Writer – Krati Nitin
Editor – Saba Godiwala