Foreign direct investment (FDI) from the United Arab Emirates (UAE) to India has witnessed a significant surge, tripling from $1.03 billion in 2021-22 to $3.35 billion in 2022-23. This remarkable growth has propelled the UAE from the seventh-largest investor to the fourth-largest investor in India. The strengthening bilateral ties and investment cooperation between the two countries have been instrumental in driving this surge.
UAE Emerges as Fourth Largest Investor in India
According to the latest data from the Department for Promotion of Industry and Internal Trade (DPIIT). The UAE has emerged as the fourth largest investor in India during the fiscal year 2022-23. This achievement comes after India implemented a comprehensive free trade agreement with the UAE in May the previous year.
FDI Surge from the UAE
FDI from the UAE to India experienced a threefold increase, going from $1.03 billion in 2021-22 to $3.35 billion in 2022-23. This substantial growth has propelled the UAE from its previous position as the seventh-largest investor to the fourth-largest investor in India.
Leading Investors in India
Singapore topped the list as the largest investor in India, with a significant investment of $17.2 billion in FY23. Mauritius and the United States followed closely with investments of $6.1 billion and $6 billion, respectively.
Factors Driving Investment Growth
The growth in investments from the UAE can be attributed to the strengthening bilateral ties and investment cooperation between India and the UAE. The signing of the Comprehensive Economic Partnership Agreement (CEPA) between the two countries on February 18, 2022, played a significant role in boosting FDI. This agreement, which came into effect on May 1, 2022, has created favorable conditions for investment.
Focus on Key Sectors
The UAE has primarily focused its investments in sectors such as services, sea transport, power, and construction activities in India. Moreover, the UAE has committed to investing $75 billion in India’s infrastructure sector and collaborating in the renewable energy sector.
Benefits of the Free Trade Agreement
India and the UAE have been operating under a comprehensive free trade agreement since May 1, 2022. This agreement allows certain goods from both countries and to have zero-duty access to each other’s markets and includes relaxed norms to promote investments.
UAE’s Contribution to India’s FDI
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.
UAE Emerges as the Fourth Largest Investor in India with Three-Fold Increase in FDI
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