India is exploring the possibility of the Abu Dhabi Investment Authority (ADIA), one of the world’s largest sovereign funds to set up a joint venture with an Indian infrastructure institution — IDFC or ILFS — to make big ticket investments in the infrastructure space where the government has plans to invest US $1 trillion over the next five years.
India is also exploring if ADIA can invest directly in the infrastructure sector through a wholly owned subsidiary. The other opportunity being explored is for ADIA to contribute to the DMIC project implementation fund by way of debt or equity which is being set up as a trust. This will ensure nullifying investment risks.
The Gulf countries are diversifying their investments in emerging countries like India and China following economic problems in Europe and the US. The Abu Dhabi team’s visit is part of a series of engagements where the Gulf countries are exploring investments in India.
ADIA has expressed keen interest in investing in India. ADIA managing director Sheikh Hamed bin Zayed al Nahyan met Commerce & Industry Minister Anand Sharma to discuss the opportunities of investment in India. Both sides agreed to finalize a joint working group to expedite the process. “This is an opportunity to enter this huge market,” al Nahyan said.
Sharma said India planned to invest $1 trillion in infrastructure over the next five years and huge opportunities existed, including along the Delhi Mumbai industrial corridor.
Keeping in mind the worsening investment climate in developed nations both sides agreed that UAE and India should engage more. Sharma underlined the need to diversify the investment portfolio and proposed that 3-4 new areas must be identified for closer interaction like pharma, services sector and engineering along with agro processing.
The United Arab Emirates is India’s leading trading partner in the entire West Asia & North Africa (WANA) region, accounting for about 63% of India’s total trade with GCC countries in 2010-11. Bilateral trade has jumped over threefold in the last five years. Total trade in 2010 touched $60.3 billion. Bilateral trade between January to November 2011 was at $66.5 billion.