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Exclusive-UAE wealth fund plans $4-5 billion in investments via India’s new finance hub – sources

2024.02.07 08:05


© Reuters. FILE PHOTO: A normal view of workplace buildings on the Gujarat International Finance Tec-City (GIFT) at Gandhinagar, India, December 8, 2023.REUTERS/Amit Dave/File Photo

By Jayshree P Upadhyay

(Reuters) – Abu Dhabi Investment Authority (ADIA), the biggest sovereign wealth fund in the United Arab Emirates (UAE), is organising a $4-5 billion fund to take a position in India by a tax-impartial finance hub in Prime Minister Narendra Modi’s residence state of Gujarat, based on two sources with direct data of the matter.

The regulatory authority for monetary providers at Gujarat International Finance Tec-City, or GIFT City, has granted in-principle approval to ADIA to arrange the fund, sources stated, declining to be recognized as they don’t seem to be authorised to talk to media.

ADIA’s intention to ascertain a presence in the hub was first introduced final July in a joint assertion by India and UAE. The quantity of funding deliberate and the approval from the regulatory authority has not been beforehand reported.

A spokesperson for ADIA declined remark. An electronic mail to the International Financial Services Authority (IFSCA), which regulates monetary providers in the hub, was not answered.

With the approval, ADIA will develop into the primary sovereign wealth fund to start investing in India via GIFT City. The greenlight comes days earlier than Modi is about to go to Abu Dhabi to inaugurate a big temple.

Since turning into prime minister a decade in the past, Modi has visited UAE six instances, strengthening ties with India’s third-largest buying and selling accomplice.

Trade between India and the UAE totalled $85 billion for the monetary yr ending March 2023, based on Indian authorities knowledge.

The Arab nation is host to one of many largest Indian diaspora populations in the world at 3.5 million, which represent nearly 35% of UAE’s complete inhabitants.

“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,” stated the primary of the 2 sources, with out elaborating.

Funds which arrange at GIFT City can make investments in Indian and international equities and debt securities, amongst different belongings.

Modi’s authorities has in current months tried to spice up exercise on the GIFT City, together with by permitting corporations that are unlisted in India to checklist shares immediately at exchanges there.

Finance Minister Nirmala Sitharam, whereas saying the federal funds this month, stated the federal government goals to construct up GIFT City as a “gateway for international capital and monetary providers for the financial system’.

The zone provides a ten-yr tax vacation for firms organising there, no taxes on the switch of funds from abroad jurisdictions and closeness to Indian markets.

ADIA and its wholly-owned subsidiaries has particularly been exempt from lengthy-time period capital features taxes from Indian investments via a particular provision launched in 2020 and relevant until March 2025.

Fund administration actions via the hub have picked up after a gradual begin. As December 2023, it had 95 native and international funds with commitments of $30 billion and investments of over $2.93 billion.

“IFSCA is in early stages of discussions with other sovereign wealth funds to set up operations in GIFT City,” stated the second of the 2 sources cited earlier in the story.

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