The UAE has emerged as the fourth largest investor in India during 2022-23, with foreign direct investment (FDI) from the Arab world’s second-largest economy to the South Asian country jumping over three-fold to $3.35 billion from $1.03 billion in 2021-22, according to official data.

The UAE‘s elevation as the fourth largest investor in India in the last fiscal compared to the seventh position in 2021-22 is subsequent to the landmark Comprehensive Economic Partnership Agreement (Cepa) signed in 2022 by the two nations, data of the Department for Promotion of Industry and Internal Trade (DPIIT) showed.

The UAE accounts for about 2.5 percent of the total FDI India received between April 2000 and March 2023. The total FDI from the UAE to India over the years totaled Dh56.5 billion by the end of 2022 as both countries stepped up efforts to establish mechanisms that will increase the volume of mutual investments and diversify them into new sectors, Abdulla bin Touq Al Mari, UAE Minister of Economy, has said.

The UAE’s FDI to India was mainly in renewable energy and telecommunications, road infrastructure, real estate, and start-ups, while Indian FDI in the UAE rose to Dh30 billion in 2020. Apart from Cepa, another growth driver of FDI from the UAE in India is the commitment from Abu Dhabi to invest $75 billion in the Indian infrastructure sector over a period of time. The UAE has also committed to partnering with India in the renewable energy sector.

In the Middle East region, the UAE ranks first by accounting for 37 percent of the total FDI inflow to the region in 2022, amounting to $55.5 billion, according to the World Investment Report 2022 issued by the United Nations Conference on Trade and Development.

According to a report released by FDI Markets, India ranks among the top five source countries for Dubai’s announced FDI projects and estimated FDI capital. India accounted for 12 percent of announced FDI projects in Dubai in 2022. Only the US (20 percent) and the UK (13 percent) are ahead of India.

On a yearly basis, in 2021, India has 78 FDI projects in Dubai, which rose to 142 in 2022. In value terms, FDI from India stood at $545.52 million in 2022 compared to $363.85 million in 2021. With 77.5 percent greenfield projects, the top sectors for FDI projects from India to Dubai in 2022 were software & it services (32 percent), business services (19 percent), consumer products (9.0 percent), real estate (6.0 percent), and financial services (5.0 percent). The top sectors for FDI in value terms from India to Dubai in 2022 were consumer products (28 percent), software & it services (20 percent), communications (19 percent), pharmaceuticals (8.0 percent), and business services (8.0 percent).