Abu Dhabi Investment Authority (ADIA), the largest sovereign wealth fund in the UAE, is setting up a $4-5 billion fund to invest in India through a tax-neutral finance hub in Prime Minister Narendra Modi’s home state of Gujarat, according to two sources with direct knowledge of the matter.

The regulatory authority for financial services at Gujarat International Finance Tec-City, or GIFT City, has granted in-principle approval to ADIA to set up the fund, sources said, declining to be identified as they are not authorised to speak to media. ADIA’s intention to establish a presence in the hub was first announced last July in a joint statement, opens new tab by India and the UAE. The amount of investment planned and the approval from the regulatory authority has not been previously reported.

A spokesperson for ADIA declined comment. An email to the International Financial Services Authority (IFSCA), which regulates financial services in the hub, was not answered.

With the approval, ADIA will become the first sovereign wealth fund to begin investing in India via GIFT City. The greenlight comes days before Modi is set to visit Abu Dhabi to inaugurate a large temple. Since becoming prime minister a decade ago, Modi has visited the UAE six times, strengthening ties with India’s third-largest trading partner.

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Trade between India and the UAE totalled $85 billion for the financial year ending March 2023, according to Indian government data.

The Arab nation is host to one of the largest Indian diaspora populations in the world at 3.5 million, which constitute almost 35% of UAE’s total population.

“By the middle of this year, ADIA could start investing through this fund. The allocated funds would be invested in India over a period of time,” said the first of the two sources, without elaborating. REUTERs

Published in The Express Tribune, February 8^th, 2024.

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