UAE Emerges as Fourth Largest Investor in India in FY23 [UPSC Notes]

The United Arab Emirates (UAE) has emerged as the fourth largest investor in India during 2022-23. This is a significant development as far as India’s bilateral relations are concerned and hence, this topic is relevant for the IAS exam international relations segment.

UAE Becomes India’s Fourth-Largest Investor

The data of the Department for Promotion of Industry and Internal Trade (DPIIT) reportedly showed that Singapore was the largest investor in India, followed by Mauritius and the US.

• In the last fiscal, foreign direct investment (FDI) from the UAE to India jumped over three-fold. 

India-UAE Relations

• The rapid strengthening of bilateral ties between India and the UAE can be chiefly attributed to the growth in investment commitments and the policy reforms between the two countries.
• A comprehensive free trade agreement has been in effect between India and the UAE since 2022. A variety of items from both nations are granted duty-free access to the markets of the other under the agreement, in addition to loosened regulations to encourage investment. 
• The Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE is one of the key drivers of the rise in foreign direct investment (FDI) from the UAE.
• The investment commitment from the UAE, in addition to CEPA, is another growth driver of FDI from the UAE in India. 
• Additionally, it has promised to collaborate with India on renewable energy projects.
• The trade deal has greatly boosted import and export between the two nations, which has raised UAE investments in Indian businesses.
• The bilateral relationship between the two countries has only strengthened over the years, with UAE becoming one of India’s most significant strategic partners in the West Asian region.
• Both countries have put in considerable diplomatic efforts to strengthen the bilateral relationship through high-level official visits. There continues to remain a warm relationship between the leadership of the two countries.
• The recently held I2U2 summit, involving a partnership between India, Israel, UAE and the U.S. only underscores the strategic alignment between the two countries.

The UAE is significant for India for multifarious reasons. Apart from being a source of investment and crude oil, it also holds a sizeable Indian diaspora population making it a significant source of remittances to India. It is also an important market for Indian goods and services.

Read more on India- UAE Relations in the linked article.

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