Indian Investments Soar in Dubai After CEPA Boost

REAL ESTATE1 month ago

Indian Investments : The signing and subsequent implementation of the Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates (UAE) has ushered in an unprecedented era of economic cooperation, particularly catalyzing a significant surge in Indian investments into Dubai. Effective from May 1, 2022, CEPA has acted as a powerful accelerant, dismantling trade barriers, enhancing market access, and fostering an environment of trust and mutual growth that has made Dubai an even more compelling destination for Indian capital across diverse sectors.

Understanding CEPA’s Transformative Power

The India-UAE CEPA is a landmark free trade agreement (FTA), the first of its kind signed by the UAE under its new CEPA program and India’s first comprehensive FTA in over a decade. It is designed to deepen bilateral ties, diversify trade beyond traditional oil sectors, and boost overall economic engagement.

Key provisions of CEPA that have directly fueled the surge in Indian investments include:

Tariff Elimination and Reduction: The agreement provides immediate and progressive duty reductions or eliminations on a vast array of goods. For instance, the UAE eliminated duties on 97.4% of its tariff lines, covering 99% of imports from India. This has made Indian products more competitive in the UAE market and, by extension, within Dubai.
Enhanced Market Access for Services: CEPA has significantly improved market access for service providers from both nations. India offered access to 100 sub-sectors, while the UAE offered 111 sub-sectors across 11 broad service categories, including business services, real estate, financial services, education, and healthcare.
Streamlined Customs Procedures and Trade Facilitation: The agreement promotes simplified customs procedures, aiming for faster and more transparent cross-border movement of goods. This includes measures like the acceptance of invoice declarations of origin and efforts to address technical barriers to trade (TBT).
Investment Facilitation: CEPA includes provisions aimed at accelerating bilateral investments in priority sectors. It creates a more stable and predictable legal framework for investors, encouraging greater capital flow.
Protection of Intellectual Property Rights: The agreement ensures stronger protection for intellectual property, providing confidence to businesses investing in innovative sectors.

These provisions have collectively created a more attractive landscape for Indian businesses and individuals looking to invest in Dubai, transforming the city into a strategic hub for their regional and global expansion ambitions.

The Surge in Indian Investments Post-CEPA

Since CEPA’s implementation, the flow of Indian capital into Dubai has seen remarkable growth. India consistently ranks among the top investor nationalities in Dubai, a trend that has only strengthened.

Overall Investment Growth: While exact real-time FDI figures specifically for 2025 are still emerging, available data confirms a significant uptick. Bilateral trade between India and the UAE surged from US$20.88 billion in FY2022 to US$28.15 billion in FY2024, representing a robust 35% increase. Non-oil trade between the two countries grew by 20.5%, reaching over AED240 billion in 2024. Indian investments in the UAE amounted to approximately US$1.16 billion in 2023-24, covering various industries. Dubai alone witnessed investments to the tune of US$1.6 billion from India between 2020 and 2023, making India one of the top five countries for foreign investments in Dubai.
Real Estate Dominance: Indian investors have historically been, and continue to be, the largest foreign buyers of real estate in Dubai. Post-CEPA, this trend has intensified dramatically. High-Net-Worth Individuals (HNIs) and Ultra-HNIs from India are showing increased interest in international property, with Dubai now surpassing London as the most preferred location. Interestingly, this surge isn’t limited to India’s major metropolitan areas; investors from Tier 2 and Tier 3 cities like Indore, Bhilai, Ranchi, Pune, Nashik, and Lucknow are increasingly purchasing residential properties. Approximately 50% of new project buyers in Dubai are from India, with nearly 70% hailing from smaller towns.
- Reasons for Real Estate Appeal: Dubai offers compelling advantages:
  - Tax Efficiency: Zero income tax on rental income and no capital gains tax on property sales, unlike India where taxes can significantly reduce profits.
  - High Rental Yields: Dubai’s rental yields, ranging from 7% to 11% in prime locations, are significantly higher than those in most Indian metros (3-5%).
  - Value for Money: Despite rising prices, Dubai often offers more value for money compared to premium areas in Indian cities. For instance, a 2,500 sq. ft. apartment in Dubai can cost between AED 1,000 per square foot in upscale locations, considerably less than comparable properties in Mumbai’s prime areas.
  - Long-Term Visa Schemes: The UAE’s Golden Visa (10-year residency for investments of AED 2 million or more) and a 2-year residence visa (for AED 750,000 investment) are major draws, offering long-term stability for investors and their families.
  - Safety and Security: Dubai’s reputation as a safe and secure city, coupled with a robust regulatory environment that protects investors, enhances its attractiveness.
Gems and Jewellery Sector: CEPA has particularly revolutionized the gem and jewellery trade. The agreement facilitated duty-free access for all Indian gem and jewellery products into the UAE. India’s gem and jewellery exports to the UAE surged by over 60%, from US$4.95 billion in FY2022 to US$8.04 billion in FY2024. The UAE now accounts for nearly a quarter of India’s total gem and jewellery exports, surpassing Hong Kong. Plain gold jewellery exports alone saw a staggering 127.62% surge, reaching US$4.24 billion in FY2024. This has positioned the UAE as a crucial hub for Indian jewellers looking to expand their global footprint.
Other Key Sectors: Indian investments are diversifying beyond traditional areas:
- Technology and Startups: Dubai’s burgeoning startup ecosystem and digital transformation initiatives are attracting Indian tech entrepreneurs and venture capital. Events like the India-UAE: Partners in Progress Conclave in May 2025 further highlight focus areas like startup innovation.
- Logistics and Trade: Dubai’s strategic location as a global trade and logistics hub continues to draw Indian businesses seeking to leverage it as a gateway to wider Middle Eastern, African, and European markets. Initiatives like the Bharat Mart, India’s warehousing facility in Dubai, exemplify this strategic integration.
- Healthcare and Education: With enhanced market access under CEPA, Indian healthcare providers and educational institutions are exploring opportunities for expansion in Dubai.
- Renewable Energy and Infrastructure: Both nations are keen on cooperation in sustainable energy. Indian companies are exploring investments in renewable energy, green hydrogen, and waste management projects in the UAE, while the UAE has committed US$75 billion towards Indian infrastructure.

Why Dubai Remains Irresistible to Indian Investors

Several factors beyond CEPA’s direct benefits contribute to Dubai’s sustained allure for Indian investors:

Proximity and Connectivity: Dubai’s geographical proximity to India (a few hours by flight) and excellent air connectivity make it an easily accessible and manageable investment destination.
Business-Friendly Environment: Dubai offers a streamlined business setup process, 100% foreign ownership in many sectors, repatriation of profits, and an extensive network of free zones with attractive incentives.
Growing Indian Diaspora: The presence of approximately 3.5 million Indian expatriates in the UAE provides a familiar cultural and social environment, easing the transition for new investors and their families. This large diaspora also contributes significantly to bilateral remittances, with the UAE being a key contributor to India’s remittance inflows.
Lifestyle and Quality of Life: Dubai’s world-class infrastructure, luxury lifestyle, diverse entertainment options, and high safety standards contribute to its appeal as a place to live and invest.
Gateway to Global Markets: For Indian businesses, Dubai serves as an efficient re-export and distribution hub, providing access to markets in the GCC, Africa, and Europe.

Challenges and Future Outlook (2025-2026)

Despite the overwhelming positive trajectory, certain considerations remain:

Regulatory Scrutiny: The surge in Indian property investments has drawn attention from Indian financial regulators like the Enforcement Directorate (ED), which is investigating suspicious real estate purchases to prevent illegal fund movements. While this may deter those with unaccounted funds, genuine investors are expected to continue their engagement.
Diversification Beyond Real Estate: While real estate remains a major draw, continued efforts are needed to diversify Indian FDI across other strategic sectors for sustained, balanced growth.
Skill Development and Talent Exchange: As both economies evolve, fostering deeper collaboration in skill development and talent exchange will be crucial for maximizing mutual benefits.

Looking ahead to 2025 and 2026, the momentum generated by CEPA is expected to accelerate. The India-UAE CEPA Council, launched in 2024, aims to further facilitate investments and trade, focusing on startups, women’s entrepreneurship, MSMEs, and the services sector. High-level engagements and ongoing dialogues, such as the “India-UAE: Partners in Progress Conclave 2025,” will continue to identify new avenues for collaboration and investment. The shared objective of increasing non-oil bilateral trade to US$100 billion by 2030, and trade in services to US$15 billion within five years, underscores a robust and optimistic outlook for Indian investments in Dubai, solidifying a truly comprehensive economic partnership.

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