34 ASIAN LEGAL BUSINESS – APRIL 2024 WWW.LEGALBUSINESSONLINE.COM MIDDLE EAST (Reuters) India has emerged as a key beneficiary of private investment from the Middle East in the last three years as diplomatic pacts facilitated deals and investors sought to tap into the South Asian country’s growing market potential, a report has shown. Cross-border investment activity from the Middle East to Asia has gained momentum, according to a report by the Global Private Capital Association (GPCA), with total cross-regional private capital deal values cumulatively reaching $83 billion since 2020, compared to $14 billion between 2016 and 2019. India accounted for more than half of all Asia deals with Middle East investors and 58% of the capital invested in Asia during the period, outpacing China and Southeast Asia. The country has led Asian markets “driven by strong SWF (Sovereign Wealth Fund) interest in leading tech and consumer digital platforms such as Jio Platforms, Flipkart and Reliance Retail Ventures,” the report, released last week, stated. Overall, foreign direct investment flows into the country had steadily increased till 2021-22, but dipped in the last two years, according to data from the Department of Promotion of Industry and Internal Trade. In the nine months ended December 2023, India attracted FDI inflows of $51.5 billion. “India’s relatively strong economic growth prospects seem to be a key reason why the country is drawing in greater investment from public asset owners, including those from the Middle East,” said Nikhil Sanghani, managing director, Economic and Monetary Policy Institute at OMFIF. “There are longer-term structural factors that also favour India’s economy, such as its positive demographic outlook, rapid digitalisation and financial deepening.” Abu Dhabi’s sovereign wealth fund Mubadala Investment Company and Goldman Sachs announced last week that they had agreed to a $1 billion private credit partnership to invest in Asia Pacific, with particular focus on India. Mubadala also bought a minority stake in Indian private hospital chain Manipal Hospitals in February. Meanwhile, the Abu Dhabi Investment Authority (ADIA) invested $598 million in Reliance Retail Ventures last October and $500 million in India’s Lenskart, opens new tab in March 2023. Diplomatic and trade agreements between the two regions, such as the UAE-India Comprehensive Economic Partnership and the expansion of BRICS, paved the way for private capital partnerships, the GPCA report said. Global leaders also announced the India-Middle East-Europe Economic Corridor last year, seeking to counter China’s Belt and Road push on global infrastructure. INDIA BEATS ASIAN RIVALS IN MIDDLE EAST PRIVATE CAPITAL DEALS SINCE 2020 (Reuters) India and the United Arab Emirates have signed an agreement on a trade corridor that aims to connect Europe with India through parts of the Middle East by sea and rail, an ambitious plan backed by the U.S. and the European Union. The announcement of the framework agreement, reached during a visit by Prime Minister Narendra Modi to the Gulf state, was released in a statement by the Indian foreign ministry, although few details on what the sides had agreed on were made public. “This would build on previous understandings and cooperation on this matter and foster India and the UAE cooperation furthering regional connectivity,” the ministry statement said. The corridor, announced last September on the sidelines of the G20 summit in New Delhi, aims to extend from India across the Arabian Sea to the United Arab Emirates and through Saudi Arabia before connecting through Jordan and Israel to Europe. The ministry’s statement, however, made no mention of any country apart from India and the UAE, a regional Gulf Arab power, whose ties are built on over a century of trade links. The UAE forged diplomatic relations with Israel in 2020 under a U.S.-backed initiative known as the Abraham Accords that led to other Arab states, including Bahrain establishing ties. The UAE has maintained those relations with Israel throughout the war, though it has also repeatedly criticised Israel’s bombing of Gaza and called for a ceasefire. The framework agreement between India and the UAE appears to signal that both states are pushing forward with the plan to establish the corridor, which may also undermine China’s global trade infrastructure belt and road connectivity strategy. It has also been signed as Yemen’s Houthi movement has launched attacks on shipping vessels sailing the Red Sea, which the Iran-backed group has said is in protest of Israel’s bombing of Gaza. The attacks have endangered trade via the sea route. The UAE and India also signed a bilateral investment treaty and exchanged cooperation agreements covering electrical interconnection, trade, and digital infrastructure. India, UAE sign pact on trans-continental trade corridor
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