Overview: India and the United Arab Emirates (UAE) are looking to take their investment partnership further, with Abu Dhabi’s newly established sovereign investment fund L’IMAD being discussed as a potential contributor to the next phase of bilateral cooperation. The development comes at a time when UAE-linked investment in India is expanding across infrastructure, manufacturing, energy and other strategic sectors. For Indian businesses, a larger role for UAE institutional capital could mean new opportunities for investment, joint ventures, expansion and access to international capital.
Prime Minister Narendra Modi met Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan on the sidelines of the 18th BRICS Summit in New Delhi. The two leaders discussed taking the India-UAE Strategic Partnership forward across areas including defence, artificial intelligence, space, critical minerals, energy, food security and connectivity. Investment ties and new possibilities in strategic energy infrastructure were also part of the wider discussion.
The meeting also brought attention to the potential role of L’IMAD in strengthening investment cooperation between India and the UAE.
This does not mean that India has received a $300-billion investment commitment from L’IMAD. The approximately $300-billion figure refers to the reported size of the Abu Dhabi investment platform. The significance for India lies in the possibility of greater participation by UAE institutional capital in Indian opportunities.
What Is L’IMAD?
L’IMAD is Abu Dhabi’s newly established sovereign investment fund, with an asset base reported at around $300 billion.
Its investment interests cover strategic areas including energy, infrastructure, logistics, aviation and industry. Its potential role in India therefore matters particularly for projects that require substantial capital and have longer investment horizons.
The latest India-UAE discussions also point to broader cooperation in areas such as defence, space, nuclear energy, technology and innovation.
For Indian businesses, the development is worth watching because greater institutional investment can have an impact beyond the companies receiving capital directly.
UAE Investment Is Already Taking Shape in India
The scale of UAE-linked investment can also be seen in the proposed $11.5-billion integrated aluminium project in Odisha.
UAE-based International Holding Company (IHC) and the Adani Group announced plans for the project in July 2026. The proposed 50:50 joint venture is expected to include an alumina refinery, aluminium smelter, captive power plant and downstream manufacturing facilities.
The project is separate from L’IMAD, but it illustrates the scale of UAE-linked capital being considered for Indian industrial projects.
Developments of this nature can also create opportunities for Indian suppliers, manufacturers, technology businesses, logistics companies and other enterprises connected to large project ecosystems.
What Greater UAE Investment Means for Indian Businesses?
The potential benefits of greater UAE investment are not limited to businesses receiving direct funding.
Indian companies could see opportunities in:
- Infrastructure and industrial projects;
- Manufacturing and supply chains;
- Technology and innovation;
- Energy and related businesses;
- Logistics and connectivity;
- Joint ventures with UAE investors; and
- Expansion backed by international capital.
Foreign investment can bring more than funding. Depending on the transaction, it can also provide access to technology, expertise, international networks and new markets.
But bringing foreign capital into an Indian business also changes the regulatory considerations around the transaction.
FDI Compliance Becomes Important
A UAE investor cannot simply invest in an Indian business without considering India’s foreign investment framework.
Businesses receiving foreign investment need to pay close attention to the applicable FDI framework, FEMA requirements, ownership structure and reporting obligations.
Businesses should first determine whether the proposed investment qualifies as Foreign Direct Investment (FDI) and then assess the applicable sectoral cap, entry route and conditions.
Depending on the transaction, the business may also need to consider:
- Whether the sector permits foreign investment;
- Whether the investment falls under the Automatic Route or requires Government approval;
- Applicable sectoral caps and conditions;
- Pricing and valuation requirements;
- Shareholding and ownership structure;
- FEMA reporting requirements;
- Tax implications; and
- Ongoing corporate and statutory compliance.
The applicable requirements depend on the nature of the investment and the sector in which the Indian business operates.
This is why FDI compliance should be considered at the structuring stage, rather than after the foreign investment has already been received.
Can UAE Investors Invest in Indian Companies Under the Automatic Route?
Yes, where the relevant sector permits investment under the Automatic Route and the applicable conditions are satisfied.
However, the Automatic Route is not available for every sector or investment structure. Sectoral caps, ownership conditions and other requirements may apply, while certain investments require prior Government approval.
UAE investors should therefore assess the applicable FDI rules, FEMA requirements and reporting obligations before entering into the transaction.
Businesses can review the applicable FDI routes, sectoral caps and regulatory requirements before proceeding.
Setting Up an Indian Business: Why Structure Matters
For a UAE investor looking to establish a presence in India, choosing the right business structure is an important early decision.
Depending on the proposed activity and investment model, this could involve incorporating an Indian company, setting up a subsidiary or establishing another permitted form of business presence.
An Indian subsidiary can be considered where a foreign investor wants to operate through an Indian corporate entity.
The structure should be assessed alongside:
- Proposed ownership and shareholding;
- FDI eligibility;
- Sector-specific restrictions;
- Capital requirements;
- Tax considerations;
- FEMA compliance; and
- Ongoing corporate filings and governance requirements.
Getting the structure right at the beginning can make subsequent investment, expansion and compliance considerably easier.
Foreign Investment Also Brings Ongoing Reporting
Receiving FDI is not the end of the compliance process.
Indian entities with outstanding foreign investment may have continuing reporting obligations under FEMA. For example, an entity with outstanding foreign assets or liabilities as on 31 March may need to file the annual FLA Return with the RBI.
The FLA Return is separate from transaction-based FEMA filings such as FC-GPR and FC-TRS. Businesses receiving foreign investment should therefore maintain a proper compliance calendar rather than treating FDI reporting as a one-time requirement.
India-UAE Investment Relationship Is Moving Beyond Trade
The latest discussions around L’IMAD reflect the broader evolution of India-UAE economic relations.
Investment cooperation is increasingly extending into infrastructure, energy, manufacturing, technology and other strategic areas. The proposed Odisha aluminium project is one example, while the discussions around L’IMAD point towards the possibility of greater institutional participation in India’s economy.
For Indian businesses, this could mean greater access to international capital and strategic partnerships.
For UAE investors, India offers opportunities across established industries as well as emerging sectors.
But the opportunity comes with a regulatory responsibility: foreign investment must be structured, received and reported in accordance with India’s applicable laws.
SetIndiaBiz Support
For UAE investors entering India and Indian businesses receiving foreign investment, the investment itself is only one part of the process. The business structure, FDI route, corporate documentation, FEMA-related requirements, regulatory filings and ongoing statutory records also need to be managed properly. SetIndiaBiz experts support with comprehensive foreign investment compliances, company incorporation, Indian subsidiary structures, regulatory documentation and ongoing corporate requirements, helping businesses build a compliant foundation for investment and expansion in India.
FAQs
What is L’IMAD?
Can UAE investors invest in Indian companies under the Automatic Route?
What FDI compliance requirements apply to UAE investors?
The requirements depend on the sector and investment structure. They may include compliance with sectoral caps and conditions, FEMA provisions, pricing and valuation rules, reporting requirements and applicable corporate regulations.
Does a UAE investor need to incorporate an Indian company?
Not necessarily. The appropriate structure depends on the proposed business activity, investment model and applicable regulations. An Indian subsidiary may be appropriate for some businesses, while another permitted structure may be more suitable in other cases.
In This Article
Author Bio
Setindiabiz Editorial Team is a multidisciplinary collective of Chartered Accountants, Company Secretaries, and Advocates offering authoritative insights on India’s regulatory and business landscape. With decades of experience in compliance, taxation, and advisory, they empower entrepreneurs and enterprises to make informed decisions.
