UAE Becomes India’s 4th Largest Investor In 2023 Signifying The Dominance Of Indian Market On Global Platform.

According to government data, the United Arab Emirates (UAE), with whom India signed a comprehensive free trade deal in May last year, emerged as India’s fourth largest investor during 2022-23. In 2022-23, the UAE was the fourth largest investor in India, up from seventh in 2021-22. Considering the sources from the Department for Promotion of Industry and Internal Trade (DPIIT), FDI from the United Arab Emirates to India more than tripled in the last fiscal year to USD 3.35 billion, up from USD 1.03 billion in 2021-22.

Who held the positions of the top three investors on Indian lands in FY23?

Singapore was the top investor in India in the fiscal year 2022-23, with investments totalling $17.2 billion. The Southeast Asian city-state was followed by Mauritius, an island country that sent $6.1 billion in investments. The United States came in third position with $6 billion in investments.

Expert Opinion on India-UAE Relations.

According to Rudra Kumar Pandey, Partner, Shardul Amarchand Mangaldas & Co, the quickly strengthening bilateral ties and investment cooperation between India and the United Arab Emirates can be attributed primarily to the strong bilateral relations between India and the UAE, growth in investment commitments from the UAE, and policy reforms to further ease of doing business between the two countries.

What leads to the spike in FDI for India, in sync with UAE?

CEPA between India and the UAE on February 18, 2022 (effective May 1, 2022) is one of the critical criteria for an increase in FDI from the UAE.

Aside from CEPA, another major engine of FDI from the UAE in India is the UAE’s investment pledge. The UAE has promised to invest USD 75 billion in India’s infrastructure sector over time. It has also agreed to collaborate with India in the renewable energy industry, according to Pandey.

Since May 1 of last year, India and the UAE have had an entire free trade agreement in place. A variety of things from both countries will have zero-duty access to each other’s markets as a result of the agreement, and relaxed norms to encourage investment.

Between April 2000 and March 2023, the country received around 2.5 per cent of the total FDI received by India. According to the data, India has received USD 15.6 billion in foreign inflows from the UAE over this time period. The trade deal has greatly increased imports and export between the countries, and UAE’s investment in Indian enterprises.

The continual liberalisation of India’s FDI policy has further promoted such investments. Similarly, there is a scenario of many Indian companies looking to expand in the UAE.  The Abu Dhabi Investment Office, through their Innovation Programme, actively supports innovation-driven companies with financial and non-financial incentives like data, network, licencing, logistics, real estate, visa, and so on. Such growth ideas or activities of Indian businesses even give an incentive for UAE-based investment funds to invest more in India’s innovation-based firms, according to Ghosh.

The UAE’s investments in India are mostly in industries such as services, marine transport, electricity, and construction. According to the India Brand Equity Foundation (IBEF), which was founded by the Ministry of Commerce and Industry, major imported commodities from the UAE include petroleum crude (US$ 12,756 million), petroleum products (US$ 6,862 million), and others between April and November 2022.

Why is the confidence in Indian markets growing?

Does India appear to be an appealing investment destination? The significant growth in FDI inflows to India explains India’s appeal as a preferred investment location. It increased from $6 billion in 2002 to over $38 billion in 2009.

According to a Deloitte poll, a high majority of global business executives remain optimistic about India’s prospects and are preparing to make extra and first-time investments in the nation. When compared to China, Brazil, Mexico, and Vietnam, India has the most optimistic impression of the global economy. It’s going against the grain. Corporates in the United States and the United Kingdom are on the same page and have voiced more trust in India’s macroeconomic stability.

According to sources State Bank of India, India has surpassed the United Kingdom as the fifth-biggest economy and is on track to become the fourth-largest by 2027 and the third largest by 2029 at current growth rates. India’s proportion of global GDP will rise to 3.5 per cent in 2022, up from 2.6 per cent in 2014.

Over the next 25 years, India hopes to become a developed and high-income country. Despite the fact that the worldwide Covid-19 outbreak, increasing inflation, and the ongoing crisis in Ukraine have all harmed every country’s development narrative, India has been able to efficiently manage the economic losses through fiscal support. India’s economy is finally back on track, albeit there are still some obstacles.

The UAE’s ascent as an important investor in India reflects its growing trust in the Indian market. The economic and regulatory stability of India, along with the country’s significant development potential, has piqued the interest of UAE investors. The UAE has taken advantage of these chances to grow its position in the Indian market, thanks to India’s enormous consumer base, talented labour, and impending reforms.

Proofread & Published By Naveenika Chauhan