The United Arab Emirates (UAE) is exploring the possibility of investing as much as $50 billion in India, its second-largest trading partner, in a movie aimed at capitalizing on India’s status as the world’s fastest-growing major economy.
These preliminary commitments from the UAE are expected to be officially announced next year. The UAE’s investment in India is part of a broader strategy to strengthen economic and political ties between the two countries.
Indian Prime Minister Narendra Modi held meetings with UAE President Shiek Mohammed bin Zayed in July, reflecting their commitment to boost bilateral relations. Over the past decade, both nations have sought ways to enhance collaboration, with the goal of increasing non-oil bilateral trade to $100 billion.
The discussions encompass a wide range of investment opportunities, including stakes in key Indian infrastructure projects and state-owned assets. Some of these investments may involve UAE sovereign wealth funds such as the Abu Dhabi Investment Authority (ADIA), Mubadala Investment Co., and ADQ.
While the size and timing of these investments have yet to be finalized, they are expected to be unveiled before Prime Minister Modi’s bid for a third term in federal elections scheduled for next year. These investment commitments are unlikely to come with specific timelines for implementation, according to sources familiar with the matter.
Notably, entities overseen by Shiekh Tahnoon bin Zayed Al Nahyan, the brother of the UAE president and chairman of International Holding Co., have initiated preliminary discussions about investing billions of dollars in India. This is indicative of the UAE’s growing interest in India’s economic prospects and opportunities for investment.
As part of their commitment to building a closer economic relationship, the UAE is looking to diversify its investments and strengthen ties with India. Last month, International Holding Co. acquired a 5% stake in India’s Adani Group, a major conglomerate led by Gautam Adani. This move underscores the growing connection between the two countries in terms of investment.
The UAE’s Royal Group has long recognized India’s potential as a key driver of economic growth. Executives from the UAE have described India as a potential growth engine for the next decade. Shiekh Tahnoon also serves as the chairman of ADQ and ADIA, one of the world’s largest sovereign wealth funds, which manages nearly $1 trillion in assets.
This investment initiative reflects the UAE’s ongoing efforts to forge closer economic relationships and diversify its investments, particularly in emerging markets. In addition to India, other Gulf state-backed investors, including the Qatar Investment Authority and Saudi Arabia’s Public Investment Fund, have played a prominent role in India’s investment landscape.
The UAE’s strategy is part of its broader foreign policy approach, which positions the country as a neutral player in the increasingly polarized landscape between Washington and Beijing. With a significant amount of sovereign wealth under management, the UAE has the potential to influence infrastructure development and investments in partnership with countries like India.
For India, these substantial foreign investments represent an opportunity to highlight its efforts to strengthen the economy ahead of the 2024 national elections. By attracting major investments from strategic partners like the UAE, India’s leadership can showcase its economic initiatives and drive future growth.
Earlier this year, the UAE also announced plans to support Turkey’s economy with a $51 billion investment pledge, a significant portion of which was dedicated to energy investment pledge, a significant portion of which was dedicated to energy investments. While some specific deals have faced challenges, the broader bilateral push to foster economic collaboration remains a focal point of the UAE’s foreign policy.
The UAE’s consideration of a $50 billion investment in India highlights the growing importance of the economic and strategic partnership between the two nations. These investments have the potential to shape India’s economic trajectory and further strengthen the bonds between the UAE and India.