UAE considers $50 billion investment in India, strengthening bilateral ties: Report

The United Arab Emirates (UAE) is mulling an investment of up to $50 billion in India, its second-largest trading partner, as part of a broader strategy to tap into the world's fastest-growing major economy. As reported by Bloomberg, provisional commitments from the UAE may be disclosed early next year.

These potential investments would follow discussions between India's Prime Minister, Narendra Modi, and UAE President Sheikh Mohammed bin Zayed in July. Over the past decade, both nations have been working to strengthen their ties, with the goal of increasing non-oil bilateral trade to $100 billion. Modi's recent visit to Abu Dhabi marked his fifth trip to the Gulf nation since he assumed office as prime minister in 2014. The last Indian premier to visit the UAE prior to him was Indira Gandhi in 1981.

The discussions include the possibility of acquiring stakes in key Indian infrastructure projects and state-owned assets. Announcements are likely to be made before Modi seeks a third term in the elections scheduled for next year. Some of these investments could involve sovereign wealth funds such as the Abu Dhabi Investment Authority, Mubadala Investment Co., and ADQ.

The exact timelines for a significant portion of these investments are yet to be determined, and no final decisions have been made regarding the size or timing of these announcements.

As part of this effort, entities overseen by Sheikh Tahnoon bin Zayed Al Nahyan have initiated preliminary discussions about investing billions of dollars in India. Sheikh Tahnoon is the brother of the UAE president and serves as the chairman of International Holding Co., which recently disclosed a 5% stake in Gautam Adani's flagship conglomerate. This move came shortly after IHC reduced its holdings in two Adani companies, although it reaffirmed its commitment to India at the time.

Royal Group has shown a strong interest in India for some time, with executives considering it a potential growth engine for the next decade. Sheikh Tahnoon also serves as the chairman of ADQ and ADIA, one of the world's largest sovereign wealth funds with assets close to $1 trillion.

Lured by the expanding middle class and seeking to diversify from conventional investment destinations like Europe, government-backed investors from the Gulf states have been strengthening their relationships with India. Other investors, such as the Qatar Investment Authority and Saudi Arabia's Public Investment Fund, have also become notable contributors to India's growth.

The UAE's plan underscores the government's ambition to position itself as a neutral player in a world increasingly divided between Washington and Beijing. With close to $1.5 trillion in sovereign wealth, the UAE is a crucial partner for the world's most populous nation, which is striving to bridge infrastructure gaps. Significant foreign investments would enable Prime Minister Modi to emphasise his efforts to bolster India's economy ahead of the 2024 elections.