Middle East plans of Indian companies not affected by war as investments in March doubled to $686 mn- Moneycontrol.com
Indian firms sent $686 million to UAE businesses in MarchInvestments rose despite US-Iran tensions in the regionODI flows show Indian corporates remain confident in UAE
Investments by Indian companies into their United Arab Emirates (UAE) businesses remained undisturbed in March even as the war between the US and Iran saw extensive attacks on civilian infrastructure of the region. The latest Reserve Bank of India (RBI) data shows 208 Indian companies put together sent $686 million to their businesses in the Middle East in March.
In comparison, 199 companies put together sent $322 million in February and 178 companies sent $93 million in January through Overseas Direct Investment Route(ODI).
For instance, during March Lloyds Metals sent $68 million to its subsidiary in UAE through debt investment while Devyani India, which runs restaurants such as KFC and Pizza Hut in India, remitted $100 million via equity shares in its UAE JV. Adani Power sent $1 million to its UAE Subsidiary while Patanjali Ayurved sent $38 million, data showed.
The list also includes a $8 million investment by Sterling and Wilson renewable and a $34 million investment by Sunday Proptech (OYO), data showed.
ODI is the route used by companies to send money to their foreign subsidiaries and joint ventures. This is different from Liberalized Remittance Scheme(LRS) which is used by Individuals to send upto $250,000 overseas.
This rise in investments through ODI comes even as HNI investors have turned cautious about UAE and investments into the real estate sector is already showing signs of moderation.
"The March ODI numbers tell a compelling story – India Inc. isn't blinking. 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. Realistically, a few months of geopolitical noise does not really unwind years of strategic positioning," said Himanshu Chahar, Partner, Cyril Amarchand Mangaldas.
UAE has been the third largest source of ODI investment for Indian companies for last few 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 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, Katalyst Advisors.
Even overall ODI numbers showed a surge in March with total investments touching $7 billion mark. On February 2, US President Donald Trump withdrew punitive tariffs against India and experts say this would act 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. The key point is simple: cross-border confidence works only when legal structure is strong," said Rahul Hingmire, Managing Partner, Vis Legis Law Practice.
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