Narendra Modi’s two-day visit to UAE next week mainly focuses to boom trade and investments between the two regional economic powerhouses and also aims to attract much needed foreign investment to boost the economy. The visit aims to attract the huge untapped potential of the Abu Dhabi Investment Authority (ADIA) sovereign wealth funds estimated at over $800 billion for infrastructural needs in the backdrop of the $1 trillion infrastructure spending planned by India. India's on-going talks with the Gulf countries on finalizing Free Trade Agreement (FTA) are also expected to get a new boost with the Indian leader's visit. Attracting more foreign direct investments to India, which is among the top three trade partners of the UAE, is certainly one of the main agendas of the Indian leadership.
Further this visit will also give impetus to Bilateral Investment Protection Agreements (BIPA) which earlier has not functioned to its potential to attract investments due to fluctuation in the Indian economy in the last two years. India is committed to implementing the BIPA signed with the UAE to encourage further investment flow into the country. Earlier in December 2013 the deal was signed to ensure protection of cross border investments by India and the UAE which aimed to speed up the investments and also giving a fresh momentum to stalled joint venture projects.
Currently, the UAE investments in India are estimated to be $8 billion of which around $3.01 billion as of January 2015 is in the form of foreign direct investment, while the remaining is portfolio investment. Due to curb on gold imports the two-way trade has declined from a record high of $75.45 billion in 2012-13 to $59.54 billion in 2013-14. The UAE's investments in India are mainly concentrated in five sectors which include 15.52% in Construction Development, 13.09% in Power, 9.90% in Metallurgical Industries, 9.58% in Services Sector and 4.90% in Computer Software & Hardware.
UAE is the tenth biggest investor in India in terms of FDI, investments by Indian companies in the UAE are estimated to be in excess of $55 billion, making the Gulf country a sought-after destination of Indians.
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