Dubai - May 2024

The UAE-based investment banking advisory firm, Alpen Capital, announced the publication of its research report titled “GCC-India Corridor – Investment Opportunities”. This report provides an analysis of the investment flows between the GCC and India. It assesses the competitiveness of both regions and identifies key sectors for potential cooperation and investment. Additionally, the report examines the investment drivers and challenges within both regions. Furthermore, it profiles prominent Indian companies which have invested in the GCC and vice versa. The report also includes profiles of the sovereign wealth funds (SWFs) of the GCC.

“Indian engagement with the GCC countries is expanding at a rapid pace. The vision of the leadership on both sides, in India as well as in the GCC countries, provides a clear roadmap for deepening cooperation across sectors. These partnerships are two-way – creating win-win solutions for all stakeholders. On the other hand, the growth story of India is itself a big pull for investors. The returns from investing in India are some of the highest in the world. Further, investing in startups is creating an opportunity to be part of cutting-edge technological revolution that is creating next generation solutions for everyday problems. The Indian government has also undertaken major reforms, especially simplification of procedures, taxation, and implementation of single window clearances to facilitate ease of doing business,” said H.E. Sunjay Sudhir, Ambassador of India to the UAE.

The UAE and India are bound by strong economic ties and mutual opportunities exist between the two. The strategic initiatives and sector-specific opportunities make the UAE an attractive destination for Indian companies and vice versa, fostering a dynamic investment landscape. These opportunities and initiatives are expected to drive the bilateral countries relation to ever growing heights.”, said H.E. Fahad Al Gergawi, Chief Executive Officer, Dubai FDI

“Both India and the GCC are undergoing significant transition, with the respective governments moving ahead with their economic integration and diversification efforts. India's ongoing efforts to upgrade infrastructure, foster digital empowerment, boost local manufacturing, and enhance energy production align with the GCC nations' substantial investments in diversifying their non-oil economies. Though trade relations between the two blocs have been flourishing, investment relations have also experienced further advancements on the back of emerging opportunities in various sectors including healthcare, pharma, ICT, industrial manufacturing and agriculture. As these nations continue to grow and develop their economies, there is significant potential for investors from both the regions to capitalize on abundant opportunities,” said Rohit Walia, Executive Chairman and CEO, Alpen Capital (ME) Ltd.

GCC as an investment destination

The GCC is increasingly attracting attention worldwide as an investment destination, aided by the efforts of the regional governments to promote foreign direct investment (FDI) through economic diversification strategies. The region’s strategic location also plays a vital role in connecting countries across regions, thus positioning it as a viable trading hub between the East and West.

Amid strong economic advancements, cumulative FDI inflows in the GCC during 2018-22 reached US$ 164.4 billion, up 60 percent from US$ 102.7 billion during 2013-17. The UAE accounted for the highest share at 55.7 percent among the GCC nations during 2018-22, marking an 85.5 percent increase from the 2013-17 period. While GCC-India trade has experienced significant growth in recent years, India’s portion of total FDI into the GCC has declined from US$ 9.8 billion during 2013-17 to US$ 5.4 billion during 2018-22. Consequently, India’s share of total FDI inflow into the GCC declined from 9.5 percent during 2013-17 to 3.4 percent during 2018-22.

Growth Drivers

Resilient Economy: Ambitious agendas, including social and business-friendly reforms, initiatives to enhance fiscal sustainability, coupled with efforts towards upgrading infrastructure through investments have helped the region remain buoyant.

Diversification Strategies: GCC countries led by UAE and Saudi Arabia are investing in giga projects, allowing 100 percent foreign ownership, adopting structural reforms to liberalize residencies, offering funding to attract start-ups, and boosting entrepreneurship and capital market activity to diversify their economies

Encouraging Demographics: The region’s economic growth continues to be driven by its affluent and expanding population base that is largely comprised of young and working professionals. The overall income levels in the GCC have recovered substantially due to increase in oil prices and private sector growth, recording higher per capita incomes than the average of Emerging & Developing Economies in 2022.

Supporting Business Environment: The GCC offers a conducive environment for business with minimal red tape, supportive government policies, strong transport connectivity and investor-friendly free trade zones (FTZs). The nations rank amongst the most competitive economies globally with strong financial reserves, healthy international relations, and consistent spending on infrastructure, digital transformation and innovation.

Strategic Location & Connectivity: The GCC has become a hub for the global trade industry due to its strategic location connecting the Middle East, Europe, and Asia. The region offers several logistics benefits such as sea access to marine’s busiest routes while also enabling cargo and trade through its international airports.

Sector Opportunities

Indian investors have a competitive edge due to its large diaspora, rich expertise and proximity to the GCC nations. Sectors offering scope for Indian investors include healthcare, education, hospitality & tourism, retail & e-commerce, industrial & manufacturing, information communication & technology (ICT), and agriculture.

India as an investment destination

As world's fifth-largest economy, India is poised to maintain its status as the fastest-growing major economy in the near-term. Strategic investor-friendly reforms have simplified processes for businesses, positioning India as a major player across sectors.

Cumulative FDI inflow in India reached US$ 250.9 billion during 2018-22 from US$ 191.2 billion during the 2013-17 period. The GCC’s share of cumulative FDI inflow into India surged from 1.8 percent during 2013-17 to 5.4 percent during the 2018-22 period. The UAE emerged as the primary source country, contributing nearly 86.4 percent of GCC’s cumulative FDI inflows into India during the 2018-22 period.

Growth Drivers

Robust Economic Growth: As per IMF, India’s GDP growth is expected to remain upbeat, growing at a consistent pace of 6.5 percent until 2028 and surpassing growth projections of global top economies.

Strong Demographics: India has a large consumer market with an estimated population of more than 1.4 billion as of 2023. The country’s surging middle-class and young population not only reinforces competitive advantage in the services and manufacturing sectors, but also proposes the consumption power towards discretionary expenditure.

Structural Reforms: In recent years, India has introduced several noteworthy reforms including easing of FDI policies to attract foreign investments, financial inclusion, introduction of Goods and Services Tax (GST), implementation of the insolvency code, leveraging digital tools in tax assessments, IT-enablement permits and certificates, simplification of labor laws, and repealing old laws to lower the regulatory burden

Sector Opportunities

With several GCC investors, including SWFs, having already committed investments, the relationship bodes well for further flow of capital in the country. The sectors offering investment opportunities in India include infrastructure, ICT, renewable energy, agriculture & food processing, healthcare & pharma, oil & gas, and chemicals