India and the UAE have cultivated a dynamic partnership that has steadily expanded in scope, now reaching new heights in trade and investment. With the UAE currently ranked as India’s seventh largest source of foreign direct investment (FDI) and committing over $20 billion to diverse Indian sectors, its role as an investment partner has never been more significant.
This momentum gained further traction at the recent India-UAE High-Level Task Force meeting, where both nations acknowledged the UAE’s investments and projects in India now aim for an ambitious US$ 100 billion milestone. From infrastructure and logistics to renewable energy and digital technology, the UAE’s investments are powering key sectors in India, reflecting a shared commitment to long-term growth and stability.
As both countries strengthen financial ties through strategic agreements and new economic corridors, the UAE is poised to become a driving force in India’s investment landscape.
The UAE is a key trade and investment partner for India. Besides being India’s second largest export market, it is also the seventh largest source of FDI into the country, with total investments amounting to approximately US$ 20-21 billion, including US$ 15.18 billion in FDI. The two countries have enjoyed decades of very strong bilateral ties, further strengthened by the presence of around 3.5 million Indian diaspora in the UAE (around 30% of its population).
The 2022 signing of the Comprehensive Economic Partnership Agreement (CEPA) can logically be seen as a natural progression in the long-standing and steadily deepening relationship between India and the UAE. Before that in 2018, the UAE committed US$ 75 billion toward infrastructure development in India, as notified by the commerce ministry.
More recently, during the 12th meeting of the India-UAE high-level task force on investments (HLFTI) on October 7, the two sides noted that current and future investments and projects of UAE entities in the Indian economy across energy, artificial intelligence, logistics, food and agriculture, are valued even higher than the commitment, at around US$ 100 billion. The meeting also reviewed UAE investments in Indian infrastructure assets.
During Prime Minister Narendra Modi’s visit to the UAE in February 2024, both nations signed 10 agreements aimed at enhancing cooperation in sectors like energy, infrastructure, and investments. As part of these efforts, India will establish an Invest India office in Dubai, the first such office in West Asia and the second globally after Singapore, providing a dedicated channel for UAE investors.
Additionally, the two governments agreed to collaborate on a card payment system through India’s National Payments Corporation of India (NPCI) and its subsidiary NPCI International Payments Limited (NIPL), partnering with Al Etihad Payments (AEP) to develop the JAYWAN domestic card scheme in the UAE. This system, based on India’s RuPay card platform, will support UAE’s sovereignty in digital payments. Both nations are also working to interlink their national payment systems—India’s UPI and UAE’s AANI—to enable seamless cross-border transactions. It will benefit over 3 million Indians residing in the UAE and improving real-time remittance with enhanced speed, transparency, and cost efficiency.
In 2023, the Reserve Bank of India (RBI) and the Central Bank of UAE (CBUAE) signed an MoU to boost cross-border transactions in local currencies. The agreement aims to create a Local Currency Settlement System (LCSS) for trade between the two nations, covering current and permitted capital account transactions. This system enables exporters and importers to invoice and settle payments in INR and AED instead of the US dollar, minimizing exchange rate risks and encouraging trade and investment. This effort is further supported by updated trade agreements and strategic initiatives to strengthen commercial ties:
CEPA – The UAE-India CEPA, which came into effect on May 1, 2022, has made notable strides in boosting bilateral trade, as highlighted in the second meeting of the India-UAE Joint Committee. Key achievements so far include the formation of a technical group to harmonize trade data, streamlining Tariff Rate Quota implementation, and improving market access for Indian jewelry exporters. Additionally, the meeting pushed forward mutual recognition of professional qualifications, expedited pharma product approvals, and tackled compliance issues related to certain imports, further strengthening the economic partnership.
Bilateral Investment Treaty (BIT) – The Bilateral Investment Treaty (BIT) between India and the UAE, signed on February 13, 2024, in Abu Dhabi, took effect on August 31, 2024. This treaty replaces the previous Bilateral Investment Promotion and Protection Agreement (BIPPA), which expired on September 12, 2024, ensuring that investors from both nations continue to receive investment protection.
The new BIT aims to enhance investor confidence by guaranteeing fair treatment, non-discrimination, and access to an independent arbitration forum for dispute resolution. It strikes a balance between protecting investors and allowing the state to regulate, thereby ensuring sufficient policy space for both countries. Key features of the BIT include a closed asset-based definition of investments, protection against expropriation, and provisions for transparency, fund transfers, and compensation. The treaty is anticipated to further strengthen economic cooperation between India and the UAE and encourage increased investment flows.
In contrast to India’s Model BIT, which excludes portfolio investments such as stocks and bonds, the India-UAE BIT includes these as protected investments. Additionally, it facilitates Investor-State Dispute Settlement (ISDS) through arbitration, reducing the local remedy time period from five years to three years before investors can initiate arbitration.
High-Level Task Force on Investments (HLTFI): Established in 2013, the task force aims to enhance trade, investment, and economic relations between India and the UAE. It serves as an effective platform for discussing opportunities and prospects for increased investments in both countries while also addressing challenges faced by investors. The task force is crucial in facilitating discussions on important agreements, such as the CEPA and the BIT.
The UAE’s emphasis on developing its manufacturing base was underscored in March 2021 with the introduction of Operation 300bn. This 10-year initiative, led by the Ministry of Industry and Advanced Technology (MoIAT), aims to raise the industrial sector’s contribution from AED 133 billion (US$ 36 billion) to AED 300 billion (US$ 81 billion) by 2031. This effort aligns with the UAE’s goal to reduce its reliance on oil. The UAE is choosing to establish manufacturing bases in foreign countries to leverage their extensive workforces and the advantages offered by trade agreements.
Currently, direct equity investments from the UAE in India total just under US$ 20 billion, with nearly US$ 3 billion invested in the last fiscal year alone. According to Invest India, the primary investment areas for the UAE in India include real estate, ceramics and glass, transport and warehousing, financial services, as well as coal, oil, and gas.
Key developments in UAE investments in India include:
Energy: The UAE is enhancing its crude oil storage capacity in India through partnerships with Indian Strategic Petroleum Reserves Limited (ISPRL). Abu Dhabi National Oil Company (ADNOC) currently holds about 5.86 million barrels at Mangalore and is exploring additional storage options. An agreement signed during Sheikh Khaled bin Mohamed bin Zayed Al Nahyan’s recent visit to India establishes a framework for this collaboration. The recent authorization granted to ADNOC allows the company to re-export oil from Indian storage, positioning India on par with other Asian nations like Japan and South Korea, where international oil producers have similar rights.
Agriculture: India and the UAE are set to create a food corridor to improve food security in the UAE while benefiting Indian farmers. The initiative will kick off with an investment of about US$ 2 billion (around ₹17,000 crore) focused on food processing and logistics for food parks. The UAE plans to invest in building food processing facilities in India to ensure high-quality products made from Indian farmers’ produce are available for sale in the UAE. This partnership aims to enhance agricultural collaboration and boost the economic prospects of Indian farmers.
Operations in the GIFT City – The Abu Dhabi Investment Authority (ADIA), the UAE’s largest sovereign wealth fund, has officially launched its operations in India by opening an office in GIFT City, Gujarat, after receiving the required regulatory approvals. ADIA plans to establish an Alternative Investment Fund in GIFT City, aimed at managing all its India-related investments.
Numerous UAE companies have established a presence in India. Notable among them are DP World, Etihad Airways, Sharaf Group, FAB Bank, Lulu Group, Emaar Properties, and Emirates NBD. These firms have secured a substantial market share across various Indian sectors, including finance and banking, retail, real estate, logistics, and transportation, among others.
The UAE is also signing important investment agreements with various Indian states. For instance, the Government of Rajasthan has entered into an MoU with the UAE for a Rs 3 lakh crore investment in renewable energy, targeting 60 GW of solar, wind, and hybrid energy capacity in the state’s western districts.
The India-Middle East Economic Corridor (IMEC) is poised to significantly boost infrastructure investments in India, primarily through collaborations between India and the UAE. Aiming to create new trade routes that connect India to the West, the corridor seeks to address and mitigate supply chain disruptions caused by conflicts.
Announced at the G20 Leaders’ Summit on September 9, 2023, the IMEC initiative includes a Memorandum of Understanding (MOU) signed by leaders from India, the European Union, Saudi Arabia, the UAE, and the US. The corridor comprises two main segments: the eastern corridor that links India to the Gulf and the northern corridor that connects the Gulf to Europe. It aims to establish a reliable and cost-effective transit network for cross-border ship-to-rail transport, enhancing existing maritime routes. The IMEC’s objectives include improving efficiency, lowering costs, securing regional supply chains, increasing trade accessibility, fostering economic cooperation, creating jobs, and reducing greenhouse gas emissions, thereby facilitating the integration of Asia, Europe, and the Middle East.
The initiative signals a significant push for investments in Indian infrastructure, especially in ports. The construction of the rail route is projected to require around US$ 20 billion in funding, with West Asia expected to play a crucial role as a financier. Moreover, the IMEC plans to develop power lines and pipelines for transporting green energy, necessitating substantial investments from both public and private sectors.
IMEC presents an opportunity to align physical connectivity infrastructure with regulatory reforms and trade agreements, particularly benefiting India. While the CEPA addresses regulatory aspects, IMEC focuses on infrastructure development. To promote corridor cooperation, a high-level Indian delegation visited three pivotal UAE ports (Khalifa Port, Fujairah Port, and Jebel Ali Port) in May 2024, discussing potential investments in port development, logistics, and supply chains.
Overall, the IMEC is set to catalyze significant investments in Indian infrastructure, driving economic growth and enhancing trade connectivity between India and the wider region.
The UAE’s deepening economic ties with India are set to transform India’s investment landscape, with UAE entities eyeing $100 billion in total investments across various sectors, far surpassing earlier commitments. As highlighted in recent India-UAE High-Level Task Force meeting, these investments target critical areas like energy, AI, logistics, and agriculture, building on an already vibrant economic relationship.
The UAE’s rising role as a top investor is further bolstered by strategic initiatives, including infrastructure collaborations and regional connectivity projects like the India-Middle East Economic Corridor (IMEC). As India and the UAE streamline cross-border payment systems and take concrete measures to promote investments, the foundation is being laid for sustained and diversified business engagement. Through this partnership, both nations are not only fostering economic resilience but also advancing shared goals in innovation, sustainability, and regional stability, positioning their collaboration as a key driver of growth for the years ahead.
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