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FDI from UAE to India surges Dh56.5b in 2022

UAE-India relations have evolved into an exceptional model of bilateral cooperation, minister says

Published: Tue 30 May 2023, 4:48 PM

By
Issac John

Abdulla bin Touq Al Mari, UAE Minister of Economy. — KT file

Foreign direct investment from the UAE to India totalled Dh56.5 billion by the end of 2022 as both countries step 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, said.

The UAE’s FDI to India was mainly in renewable energy and telecommunications, roads infrastructure, real estate, and start-ups, while Indian FDI in the UAE rose to Dh30 billion in 2020, Al Mari said during his meeting with Piyush Goyal, Indian Minister of Commerce, Industry, Consumer Affairs, Food & Public Distribution and Textiles.

The UAE minister said that the UAE-India relations have evolved into an exceptional model of bilateral cooperation and fruitful partnership aimed at promoting sustainable development, economic welfare, and the steady prosperity of their people.

“The UAE-India relations are growing at a rapid pace, as Abu Dhabi and New Delhi seek to further build on existing cooperation in light of the Comprehensive Economic Partnership between the two countries. We are working towards boosting the volume of non-oil trade exchange, which reached Dh189 billion in 2022, up 15 per cent from 2021,” said Al Mari.

“India was one of the major tourism source markets for the UAE in 2022. We welcomed nearly five million Indian visitors, while the number of Emirati visitors to India reached nearly 58,000. We look forward to working together to build on this momentum and enhance tourism flows between the two countries in the upcoming period,” the UAE minister said during his talks in New Delhi.

According to the World Investment Report 2022 issued by the United Nations Conference on Trade and Development, the UAE was ranked first in the Middle East region to receive 37 per cent of the total FDI inflow to the region, amounting to $55.5 billion.

A recent projection by experts shows that the UAE will attract a major share of $66 billion in potential FDI inflows into the Middle East, North Africa, and Pakistan (Menap) in 2023 as global investors consider the emirate an ideal destination for investment. In 2022, according to the Institute of International Finance, the UAE had attracted an estimated $22 billion in FDI inflows due to its business and visa reforms while the Menap region was expected to receive $56 billion in FDI inflows.

The oil and gas sector accounted for 59 per cent of the total FDI contributions in 2022, followed by 10 per cent in IT and communications as the country is implementing a number of steps to encourage investment in the industrial sector and increase its contribution to Dh300 billion from Dh133 billion within 10 year.

India has emerged as a key source country for FDI in Dubai. According to a report released by FDI Markets, the South Asian country ranked among the top five source countries for Dubai’s announced FDI projects and estimated FDI capital.

With 77.5 per cent of greenfield projects, the top sectors by FDI projects from India into Dubai in 2022 were software and IT services (32 per cent), business services (19 per cent), consumer products (9.0 per cent), real estate (6.0 per cent), and financial services (5.0 per cent). Meanwhile, the top sectors by FDI capital from India into Dubai in 2022 were consumer products (28 per cent), software and IT services (20 per cent), communications (19 per cent), pharmaceuticals.

In the last two decades (April 2000-December 2022), India has attracted over $904 billion in total FDI. Despite the Indian government’s restrictions on FDI from countries that share land borders with India, such as China, the country received a record FDI inflow of approximately $84.8 billion in the fiscal year 2022, including $7.1 billion in FDI equity inflows in the services sector.

According to the Department for Promotion of Industry and Internal Trade, India’s FDI equity inflows reached $52.34 billion in 2022, marking an increase from the $51.34 billion recorded in 2021 but falling short of the $64.68 billion recorded in 2020.