UAE benefits as India’s outbound investments surge

India’s outbound investments have seen a dramatic jump in fiscal year 2024-25. According to a recent EY report titled “India abroad: Navigating the global landscape for overseas investment – 2025,” these investments grew by 67.74%, reaching about USD 41.6 billion from USD 24.8 billion the previous year. Along with this impressive increase in capital deployment, the number of overseas investment deals also went up by 15%. This suggests a bigger boost in investor confidence worldwide and shows how Indian companies are expanding their footprint on the international stage.

What’s driving this surge? Well, Indian firms are increasingly focusing on diversification and sustainability—especially placing more emphasis on environmental, social, and governance (ESG) factors. These priorities are shaping their global expansion plans across key industries such as IT, energy, pharmaceuticals, automotive, and hospitality. Interestingly enough, the report points out that tech-driven growth is a key force behind this trend, aligning with the worldwide shift towards innovation and sustainable business models.

Historically, Indian outbound investments have often routed through jurisdictions like Singapore, the Netherlands, and Mauritius—places favored for their friendly tax structures and business regulations. However, there’s a noticeable shift happening now. More Indian companies are exploring routes through emerging and strategically aligned countries. The EY report highlights the growing importance of countries like the United Arab Emirates (UAE), Luxembourg, and Switzerland. These nations offer a sweet spot: favorable tax policies, progressive regulations, and strong alignment with India’s evolving focus on sustainability, digital innovation, and expanding trade.

Take the UAE, for instance. It’s not just about energy anymore; investor interest there is rising across sectors. This change has been partly driven by the India-UAE Comprehensive Economic Partnership Agreement (CEPA), which has opened up new opportunities in infrastructure, tech, and more. The UAE’s reputation as a regional business hub, with forward-thinking policies and solid infrastructure, makes it an increasingly popular gateway for Indian capital. Investments are flowing into climate tech and digital transformation sectors, which are pretty hot right now.

Luxembourg offers its own advantages—mainly in fund management and green finance, both critical for ESG-focused investments. Meanwhile, Switzerland’s strong intellectual property (IP) protections and advanced infrastructure make it an attractive alternative hub—especially for tech-focused Indian firms aiming to innovate and stay competitive.

Adding to this geographic shift are reforms happening right inside India. For example, GIFT City in Gujarat has become a fast-growing financial hub, attracting outbound investments thanks to its operational efficiencies and tax benefits. This development aligns with India’s broader plan to develop competitive, tech-driven financial centers that can both support and attract global investments.

All these changes also tie into India’s domestic policy reforms, especially recent tax reforms designed to boost the country’s appeal as a global business destination. Over the past few years, India has simplified its tax regime—cutting corporate tax rates down to 15% for new manufacturing units and 22% for others, down from as high as 30%. Changes like clearer tax treaties, reduced rates on foreign borrowings, and schemes like the Production-Linked Incentive (PLI) are encouraging more capital flow into critical sectors.

Looking ahead to the Union Budget 2025, more reforms are expected—aimed at making tax compliance easier, reducing legal disputes with faster tribunal processes, and removing exemptions that complicate the system. These steps are likely to give foreign investors more confidence because India’s tax environment will become clearer, fairer, and more predictable. Already, measures like ending the angel tax on share issuances above fair market value and reducing long-term capital gains tax from 20% to 12.5% have energized the equity markets and are set to keep the investment momentum going.

All in all, these domestic reforms coupled with strategic global outreach put India in a strong position as a major player on the worldwide economic stage. For Indian companies, diversification isn’t just about minimizing risks—it’s also a way to tap into global innovation hubs, sustainable financial channels, and emerging markets with a focus on ESG and digital growth.

This evolving investment landscape offers especially promising opportunities in sectors like climate technology and green infrastructure, particularly in the UAE and Gulf region. With its CEPA agreement and booming infrastructure, the UAE is quickly becoming a crucial hub for Indian investments—in renewable energy, green finance, and smart urban projects. This deeper economic linkage could foster tech collaborations, capital flow, and joint ventures—all geared toward sustainability and innovation, matching both India’s and the UAE’s long-term goals.

Basically, the EY report shows that Indian outbound investments are at a transformative stage, moving more deliberately towards sustainability, technology, and regulatory improvements aligned with global standards. The combined effect of tax reforms, diversification strategies, and the rise of financial hubs like the UAE and GIFT City is reshaping how India interacts with the global investment world. It’s a clear sign of confidence in India’s economic future and an indication that Indian companies are becoming more sophisticated, ESG-aware, and globally connected.

Source: Noah Wire Services