Author: AsiaOne

Abu Dhabi Investment Authority (ADIA), the UAE’s largest sovereign wealth fund, intends to establish a $4–5 billion investment fund in India through a tax-neutral finance hub in Gujarat. The fund has received preliminary approval from the regulatory authority at Gujarat International Finance Tec-City (GIFT City).

India and the UAE jointly made the announcement last July, but specific investment information remains undisclosed.

ADIA’s approval marks a milestone as the first sovereign wealth fund to invest in India via GIFT City, coinciding with PM Modi’s visit to Abu Dhabi. India-UAE trade reached $85 billion in fiscal 2023, with a significant Indian diaspora in the UAE.

ADIA aims to commence investments by mid-year, leveraging GIFT City’s offerings for both Indian and foreign assets. The Modi government seeks to position GIFT City as a premier global financial hub, offering incentives such as tax holidays.

ADIA and its subsidiaries benefit from long-term capital gains tax exemptions on Indian investments until March 2025. Despite a slow start, GIFT City has seen an increase in fund management activity, bringing in $30 billion from 95 funds and more than $2.93 billion invested by December 2023.

IFSCA is in discussions with other sovereign wealth funds for potential operations in GIFT City, signalling further growth opportunities.

India is on the verge of cementing a substantial trade agreement that could potentially yield investments amounting to $100 billion for 15 years from a select group of European nations.

The European Free Trade Association (EFTA), which is made up of Switzerland, Iceland, Norway, and Liechtenstein, is said to have made major commitments as part of an approaching trade agreement.

This anticipated investment from EFTA countries in India is poised to generate more than 1 million jobs. It is expected to predominantly target both existing and nascent manufacturing endeavours, with contributions expected from state-sponsored entities and private enterprises.

According to Bloomberg’s findings, the upcoming trade agreement seeks to expedite the flow of Indian specialists to EFTA nations and facilitate market access for specific agricultural efforts.

The Indian Commerce Ministry and EFTA have yet to provide an official comment on the matter.

Notably, Information Technology Minister Ashwini Vaishnaw disclosed last month that India is actively pursuing an annual Foreign Direct Investment (FDI) influx of $100 billion “in the next few years.” India’s attractiveness as an investment destination has drawn interest from various quarters, including the United Arab Emirates, contemplating potential investments of up to $50 billion in the country.

India’s state-run banks are poised to generate nearly $2 billion in dividends for the government in the upcoming fiscal year commencing in April. According to the senior ministry official, this data marks a substantial surge from the current period.

PM Modi has orchestrated measures to fortify these financial institutions since he took office in his first term. His strategies consist of the amalgamation of weaker banks with more robust counterparts and the implementation of bankruptcy laws to reclaim funds from defaulters. The government has invested over 3.3 trillion rupees ($39.7 billion) to recapitalize stressed banks.

State banks will pay dividends totalling at least Rs 150 billion ($1.8 billion) in 2024/25, an increase of 8.7% over the projected Rs 138 billion for the fiscal year ending in March. The net profits of state banks, including the SBI, are set to surpass Rs 1 trillion ($12 billion).

According to India’s financial services secretary, Vivek Joshi, the 12 state-run banks collectively reported net profits amounting to Rs 980 billion in the three quarters ending December. Central bank data shows the improving asset quality of state banks, with gross non-performing assets (GNPAs) dwindling to 3.2% in September 2023 from 9.6% in the March 2017 quarter.