September 2017

The GCC nations and India are strengthening historic ties across cultural, trade, economic, defense and political areas. Relations between the two regions are maturing beyond trade, as they realize the potential of strategic cooperation and growth. Though bilateral trade continues to dominate the multi-billion dollar relationship, we see that the investment flows are rising rapidly, as the regions recognize that the GCC-India corridor presents immense opportunities for investors. The GCC governments are continuously reforming policies to create an environment conducive for investment by foreign entities. On the other hand, India, as a fast growing and emerging economy, is in the process of upgrading infrastructure, creating a digitally empowered society, increasing local manufacturing and enhancing energy production. Such initiatives from both regions will create increased investment opportunities and further strengthen the relations between GCC and India.

GCC as an investment destination

The GCC nations have been able to self-fund their economic development through the wealth accumulated from the export of oil and gas. Nonetheless, foreign investments have remained imperative in diversifying revenue base, strengthening technological capabilities, improving export competitiveness and creating employment opportunities.

In contrast to the overall decline in total FDI into the GCC, investments from India grew at a CAGR of 15.9% from US$ 1.4 billion in 2011 to US$ 2.9 billion in 2016[1] .During the period, India’s share of the total investments into the GCC increased substantially from 4.7% to 16.2%.

India as an investment destination

According to a survey on World Investments Prospects by the United Nations Conference on Trade and Development (UNCTAD), India emerged as the third most attractive FDI destinations for 2017–2019[2].Indian government has relaxed FDI limits in various sectors to boost FDI.

Annual FDI from the GCC to India stood at US$ 1.4 billion in 2016, faster than the FDI growth from India to the GCC. The rapid growth is mainly due to substantial inflows during 2016 across the GCC countries, barring Oman. The GCC share in total FDI into India has increased over the years, but still remains low at 2.9%. Investments by non-resident Indians (NRIs) in the GCC also play a major role in the investments into India. The stability of the Indian Rupee over the years have supported remittances to the country. Although relations are progressing, India has not received large investments from the GCC countries, except the UAE – the 10th largest FDI investor in India.

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