UAE is seeking $50 billion investment in India. How foreign investment helps economy?

A larger wager on the fastest-growing major economy in the world is being considered by the United Arab Emirates, which is contemplating investing as much as $50 billion in India, its second-largest trading partner.

Also read : 51,000 appointment letters are issued to new recruits by PM Modi

What is foreign investment and how it helps country?

Foreign investment has emerged as a noteworthy capital source for numerous nations, such as India. As a result of the substantial capital that foreign investors are willing to invest in various countries across the globe, it has grown to be an essential component of the world economy. This money infusion has the potential to significantly advance economic development and growth

It is essential to the global economy because it gives nations access to resources like capital, technology, and knowledge. Countries can develop laws and policies that stimulate investment and advance economic expansion by having a thorough understanding of the various forms of foreign investment.

UAE May officially announce in the next year

Provisional pledges from the UAE may be announced in the first few months of the following year, according to anonymous sources.

Over the past ten years, the nations have worked to strengthen their relationship and raise their bilateral non-oil trade to $100 billion. After becoming prime minister in 2014, Modi has traveled to the Gulf state five times. His most recent visit was to Abu Dhabi. Indira Gandhi was the previous Indian prime minister to visit the United Arab Emirates in 1981.

The people said that agreements involving stakes in important state-owned businesses and infrastructure projects in India are being discussed. Announcements are probably going to come before Modi runs for a third term in the upcoming elections. According to them, some of the investments might be made by sovereign wealth funds like ADQ, Mubadala Investment Co., and Abu Dhabi Investment Authority.

Investments with no defined timeframes

According to the sources, a significant portion of the investments in the pledges are unlikely to have defined timeframes. The size and timing of the announcements are still up in the air.

According to one of the people, as part of the push, organizations under the direction of Sheikh Tahnoon bin Zayed Al Nahyan have held preliminary discussions about making billion-dollar investments in India. The chairman of International Holding Co., which last month revealed a 5% interest in Gautam Adani's flagship conglomerate, is Sheikh Tahnoon, the brother of the UAE president. Days later, IHC reduced its ownership stake in two Adani companies, although at the time the company reaffirmed its commitment to India.

India's middle class is expanding, making it a more favourable destination for investment

According to Bloomberg, Royal Group executives have long praised India, referring to it as a possible growth engine for the ensuing ten years. In addition, Sheikh Tahnoon serves as chairman of ADIA, one of the biggest wealth funds in the world, and ADQ, which together have assets close to $1 trillion.

Gulf state-backed investors have strengthened ties with India, drawn by a growing middle class and looking to diversify away from conventional investment destinations like Europe. Other notable investors in the nation include the Public Investment Fund of Saudi Arabia and the Qatar Investment Authority.

The UAE's plan is just another example of the government's efforts to project an image of neutrality in a world that is becoming more and more divided between Beijing and Washington.

UAE also seeks to invest in Turkey to help their economy

The UAE declared earlier this year that it would provide $51 billion in investments, including roughly $30 billion in energy, to help Turkey's struggling economy. According to Bloomberg News, negotiations over a single deal in that industry—just one aspect of the larger bilateral push—have broken down.

The United Arab Emirates (UAE) is an essential ally of the world's most populous country, which is working to close infrastructure gaps. The UAE is one of the few nations that hold close to $1.5 trillion in sovereign wealth. Any significant foreign investments would assist Prime Minister Modi in showcasing his initiatives to support the economy in advance of the 2024 election in India.

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