Indian Outward Investment Strategy Faces Uncertainty Amid West Asia Conflict

Overview

India's overseas investment strategy is under scrutiny as the conflict in West Asia escalates, coinciding with a significant increase in Indian companies' investments in the region over the past few years.

Outward FDI Flows to UAE

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India's outward foreign direct investment (FDI) into the United Arab Emirates (UAE) has more than doubled over the past three years, with flows rising from $494 million in FY22 to $1.29 billion in FY23 and $1.33 billion in FY24. The pace accelerated further in FY25, with flows jumping to $2.6 billion, five times the FY22 level.

UAE's Growing Share in India's Outward Investment Portfolio

The UAE's share in India's total outward FDI has increased steadily, rising from 2.7% in FY22 to 9.5% in FY23, 9.2% in FY24, and 11% in FY25. As of August 2025, Indian firms had already invested $1.07 billion in the UAE, accounting for 10.5% of India's outward FDI during the period.

West Asia's Growing Footprint in Indian Overseas Investments

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Longer-term data shows West Asia gradually emerging as a larger destination for Indian overseas investments. Cumulative Indian outward investment in the region stood at $20.5 billion by August 2025, up from $11.98 billion in March 2021. The UAE accounts for the overwhelming majority of this exposure, with $18.35 billion in cumulative investment since April 2000.

Regional Breakdown

Other destinations in West Asia include:

• Oman: $675 million
• Saudi Arabia: $488 million
• Israel: $465 million

As a share of India's global outward investment stock, West Asia's share has risen from 4.98% in March 2021 to 6.05% by August 2025, reflecting deepening economic integration between Indian companies and Gulf markets.

Risks and Uncertainty

The outbreak of conflict in West Asia raises fresh risks for projects, capital flows, and business confidence across one of India's fastest-growing overseas investment corridors.