UAE becomes India's fourth largest investor in fiscal year 2023

According to data from the Department for Promotion of Industry and Internal Trade (DPIIT), foreign direct investment (FDI) from the UAE to India surged more than three-fold to $3.35 billion in the last fiscal year, compared to $1.03 billion in 2021-22. The UAE rose to become the fourth largest investor in India in 2022-23, up from seventh place in the previous fiscal year. Singapore remained the top investor with $17.2 billion, followed by Mauritius ($6.1 billion) and the US ($6 billion).

The strengthening bilateral ties and investment cooperation between India and the UAE can be attributed to several factors. Firstly, the strong bilateral relations between the two countries have played a significant role. Additionally, there has been growth in investment commitments from the UAE, and policy reforms have been implemented to further ease doing business between the two nations. The signing of the Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE on February 18, 2022, has also contributed to the increase in FDI. The agreement became effective from May 1, 2022.

Furthermore, the UAE has made substantial investment commitments in the Indian infrastructure sector, pledging to invest $75 billion over time. The UAE has also committed to partnering with India in the renewable energy sector. These commitments have been instrumental in driving FDI from the UAE to India.

The operationalization of a comprehensive free trade agreement between India and the UAE since May 1, 2022, has further facilitated trade and investments between the two countries. The agreement has provided zero-duty access to certain goods in each other's markets and eased norms to promote investments.

India has attracted a total of $15.6 billion in FDI from the UAE between April 2000 and March 2023, accounting for approximately 2.5 percent of the total FDI received by India during this period.

Experts attribute the increase in investments from the UAE to the liberalization of India's FDI policy and the expansion plans of Indian startups in the UAE. The Abu Dhabi Investment Office, among other agencies, is actively supporting innovation-driven startups through financial and non-financial incentives, which encourages UAE-based investment funds to invest more in innovation-based startups in India.