Indian Companies' Middle East Investments Surge Amid Ongoing Conflict

Indian Companies Continue to Invest in UAE Despite Regional Tensions

The Reserve Bank of India (RBI) has released data showing that Indian companies remained undeterred in their investments in the United Arab Emirates (UAE) in March, despite the ongoing war between the US and Iran. A total of 208 Indian companies collectively invested $686 million in their businesses in the Middle East during the month.

In comparison, 199 companies sent $322 million in February and 178 companies sent $93 million in January through the Overseas Direct Investment Route (ODI). The data highlights the resilience of Indian companies in their investments in the UAE.

The list of companies that invested in the UAE in March includes Lloyds Metals, which sent $68 million to its subsidiary in the UAE through debt investment. Devyani India, which operates restaurants such as KFC and Pizza Hut in India, remitted $100 million via equity shares in its UAE joint venture. Adani Power sent $1 million to its UAE subsidiary, while Patanjali Ayurved sent $38 million. Additionally, Sterling and Wilson renewable invested $8 million, and Sunday Proptech (OYO) invested $34 million.

Read also: FirstClub Secures $55 Million in Funding from Peak XV, Sofina, and Other Investors 9 Months After $22 Million Series A Round

The Overseas Direct Investment Route is used by companies to send money to their foreign subsidiaries and joint ventures. This is different from the Liberalized Remittance Scheme (LRS), which is used by individuals to send up to $250,000 overseas.

The rise in investments through ODI comes even as High Net Worth Individual (HNI) investors have turned cautious about the UAE and investments in the real estate sector are already showing signs of moderation. However, experts say that this does not necessarily reflect a lack of confidence in the UAE as an investment destination.

"The March ODI numbers tell a compelling story – India Inc. isn't blinking," said Himanshu Chahar, Partner at Cyril Amarchand Mangaldas. "While risk-off sentiment has prompted some HNI and family office capital to pause and recalibrate, institutional and corporate capital continues to flow into the UAE with conviction."

Read also: RBI Policy Preview: A Cautionary Wait Ahead

The UAE has been the third-largest source of ODI investment for Indian companies in recent years, ranking below the US and Singapore. Indian companies are heavily invested across sectors such as services, hospitality, and infrastructure.

"The resilience reflects Indian corporates using the UAE as the platform for the India-Africa and India-MENA corridor rather than as a destination, and therefore, discounts the overall regional tensions from an investment perspective," said Binoy Parikh, partner at Katalyst Advisors.

The overall ODI numbers also showed a surge in March, with total investments touching the $7 billion mark. The removal of punitive tariffs by the US on February 2 is seen as a confidence booster for companies to continue their global plans without worrying about trade uncertainty.

"The rise in Indian investments into the UAE shows that serious businesses do not stop at headlines alone," said Rahul Hingmire, Managing Partner at Vis Legis Law Practice. "The key point is simple: cross-border confidence works only when the legal structure is strong."