Tax exemptions granted for UAE sovereign infrastructure investments in India

New move could strengthen economic ties between the two countries

Younis Al Khoori, undersecretary at the Ministry of Finance. Reem Mohammed / The National

Tax exemptions will be granted for federal and local UAE sovereign institutions investing in India's infrastructure sector, the Ministry of Finance said.

These exemptions will come into effect on  April 1, 2021, and will be limited to investments made until March 31, 2024, provided the investment is maintained for at least three years. In the future, other sectors may be identified for tax exemptions by the Indian government.

The move comes as India announces a set of amendments and investment incentives to attract foreign sovereign investments in vital sectors to boost growth.

"These exemptions are part of the UAE's unrelenting efforts to further improve economic relations with countries around the world," said Younis Haji Al Khoori, undersecretary of Ministry of Finance .

“The move also reflects the success of the recent negotiations between the joint venture teams from the UAE and India. These meetings strengthen bilateral ties and help create investment incentives that support trade exchange and economic activities between the two countries.”

UAE companies are stepping up their investments in India. Last year, Abu Dhabi Investment Authority (Adia) and India’s National Investment & Infrastructure Fund agreed to buy a 49 per cent stake in the airport unit of Indian conglomerate GVK Power & Infrastructure.

Abu Dhabi National Oil Company along with Saudi Aramco is also investing in a massive refinery complex to be built on the western coast of India, which is expected to cost as much as $70bn (Dh257bn).

Masdar, also bought a 20 per cent stake in India's Hero Future Energies company last year, as it looks to expand its footprint beyond the UAE.

Bilateral trade between the countries reached $60 billion during 2018-2019, according to Wam.