Why the Middle East is Emerging as a Top Destination for Indian Outbound Investment

Indian ODI prefer GCC countries—especially the United Arab Emirates (UAE), Saudi Arabia, Oman, Qatar, and Bahrain—because these markets combine proximity and diaspora ties with fast-tracked reforms.

Indian companies and investors are tilting toward the Middle East – especially the United Arab Emirates (UAE), Saudi Arabia, Oman, Qatar, and Bahrain – because these markets blend proximity and diaspora ties with fast-tracked reforms: 100 percent foreign ownership (with limited exceptions), stable taxes, deep free-zone ecosystems, long-term visas, and government-backed incentives. Recent Indian deals in jewelry retail, energy, EPC, and IT show the India-Middle East corridor is now about scale, not just sales offices.

What’s driving the shift

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The shift toward the Middle East is being driven by pro-investor market access and strengthened incentive policies. Legal certainty is another draw, with investor-friendly dispute resolution frameworks available in the common-law courts of the Dubai International Financial Center (DIFC) and Abu Dhabi Global Market (ADGM) in the UAE, as well as the Qatar International Court, all of which operate under robust, English-law-style systems.

UAE

The UAE now allows 100 percent foreign ownership onshore for most activities (with exceptions in strategic sectors), applies a federal corporate tax of 9 percent, and maintains a 0 percent Free Zone regime on qualifying income.

Finally, the India–UAE corridor has been significantly upgraded. The Comprehensive Economic Partnership Agreement (CEPA), signed in 2022, has reduced tariffs and expanded services access, while recent MoUs facilitate local currency settlement and UPI acceptance in the UAE, lowering transaction costs and simplifying cross-border business operations.

Also Read: UAE Investment Procedure, Requirements for Foreign Investors

Saudi Arabia

Saudi Arabia is pushing through Vision 2030 reforms, including the Regional Headquarters (RHQ) Program, which offers 30 years of 0 percent corporate tax and withholding tax for RHQ activities, while also linking eligibility for government contracting to the presence of an RHQ in the country. The regional headquarters program has been effective since January 1, 2024.

Also Read: Tax Considerations for Individuals and Investors Based in Saudi Arabia

Qatar

Qatar, under Law No. 1 of 2019, permits full foreign ownership and offers 20-year corporate tax holidays in its Free Zones, making them attractive for logistics, aviation-linked manufacturing, media, and technology businesses. National laws further permit full foreign ownership across most sectors with appropriate approvals.

Designated free zones offer the most extensive benefits for businesses focused on international operations. These areas include:

• Qatar Free Zones Authority (QFZA): Oversees the Ras Bufontas (Airport Free Zone) and Umm Al Houl (Port Free Zone), targeting industries like logistics, technology, and manufacturing.
• Qatar Science and Technology Park (QSTP): Focuses on research, technology commercialization, and intellectual property development.
• Media City (MC): Designed for media-sector investors, covering areas like production and gaming.

Also Read: A to Z of Business and Corporate Tax in Qatar

Oman

Oman has introduced an Investor Residency program, granting five- to ten-year residency permits based on investment thresholds – an attractive proposition for founders and senior managers. On April 7, 2025, Oman issued Royal Decree 38/2025, enacting the Law of Special Economic Zones and Free Zones. Key benefits include a 10-year tax exemption for qualifying enterprises from the start of operations, extendable for two additional periods for special activities, along with customs-related advantages. The law also introduces a one-stop-shop service to simplify approvals, permits, and licensing. An Executive Regulation will be issued within one year, accompanied by supporting decisions to guide implementation.

Also Read: New Oman Golden Visa Offers 10-Year Residency for Investors

Bahrain

Bahrain provides competitive operating costs, full foreign ownership in most sectors, and a growing fintech ecosystem. Its Golden License program supports large projects, while the implementation of a 15 percent Domestic Minimum Top-Up Tax (DMTT) from FY 2025 for multinational enterprises aligns the country with global Pillar Two rules but keeps the overall business environment light on taxation.

Bahrain hosts three major free zones, each designed to provide a favorable tax environment and specialized support for targeted industries.

• Bahrain Logistics Zone (BLZ): Situated near Khalifa Bin Salman Port, BLZ is a key hub for logistics and warehousing activities. Investors benefit from 100% foreign ownership, full customs duty exemptions, and proximity to regional and global shipping routes.
• Bahrain International Investment Park (BIIP): Located in Salman Industrial City, BIIP is geared toward manufacturing, technology, and export-driven enterprises. It offers a competitive investment climate with no import or export duties, full repatriation of profits and capital, and streamlined licensing procedures.
• Bahrain Airport Free Zone (BAFZ): Positioned next to Bahrain International Airport, BAFZ serves aviation, air cargo, and e-commerce businesses. It provides a highly efficient operating environment with fast customs clearance and VAT exemptions for qualifying activities.

Kuwait

Kuwait offers business incentives including corporate tax waivers for up to 10 years for foreign firms under the Foreign Direct Investment (FDI) Law, customs duty relief on imported materials, and land/real estate allocations. The government also supports small and medium-sized enterprises (SMEs) through the National Fund for SME Development, providing financing and advisory services. Additionally, the Kuwait Free Trade Zone at Shuwaikh port offers tax and other restrictions relief for qualifying businesses.

Where Indian ODI is rising: Key Middle East markets

Indian outbound direct investment (ODI) into the Middle East is rising across several key GCC markets, each offering unique advantages for expansion.

UAE

The UAE remains India’s primary base in the region, supported by hubs like Dubai/JAFZA, DIFC, ADGM, RAKEZ, along with long-term visa options. Recent activity includes Titan (Tata Group) acquiring Dubai-based jeweler Damas for approximately AED 1.04 billion (~US$283 million) in 2025 to scale across the Gulf Cooperation Council (GCC) countries. Titan can also acquire the remaining 33 percent after December 2029.

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The UAE’s policy continuity – 100 percent onshore ownership for most activities, transparent Free Zone tax rules, and clear tax and transfer pricing guidance – reduces execution risks for investors.

According to Arab News, India emerged as the top source country for FDI in Dubai in 2024, contributing over US$3 billion, which accounted for 21.5 percent of Dubai’s total FDI inflows. This amount was five times higher than India’s contributions in 2023.

Key sectors in the UAE attracting Indian investment include banking, retail, construction, technology, logistics, business services, software, IT, and real estate. Important players include Lulu Group, Joyalukkas Group, Shapoorji Pallonji, HDFC Bank, Kotak Mahindra Bank, Consolidated Shipping Services, and Rolta Middle East. Their activities range from making direct investments in Indian startups to building a substantial footprint within the UAE’s rapidly expanding economy.

Also Read: UAE Corporate Tax Filing 2025: Key Compliance Steps for Audit and Transfer Pricing Readiness

Saudi Arabia

India’s investments in Saudi Arabia have grown steadily in recent years, reaching an estimated US$3 billion as of August 2023. Speaking to the media in April 2025, Chairman of the Saudi Indian Business Council, Abdulaziz Al-Qahtani, noted that over 40 Indian companies had established regional offices in the Kingdom. These investments span a wide range of sectors, including automotive, defense, management and consultancy services, large-scale construction projects, telecommunications, IT and software development, financial services, and pharmaceuticals. Per the Indian Embassy, leading Indian corporates – such as L&T, Tata Motors, Wipro, TCS, Shapoorji & Pallonji, Tech Mahindra, Vedanta, and Essar – have a strong and expanding presence in the Kingdom.

Further, Saudi Arabia’s Vision 2030 megaprojects in energy, logistics, and social infrastructure, combined with the RHQ incentive, are attracting Indian IT, EPC (engineering, procurement, and construction), and industrial companies to the Saudi capital of Riyadh. A notable example is Wipro shifting its Middle East headquarters from Al Khobar to Riyadh in June 2025. Investors targeting government contracts must also factor in the RHQ mandate and Saudization requirements.

Source: Embassy of India, Riyadh, Saudi Arabia.

Also Read: Saudi Arabia Business Licenses Types: A 2025 Guide for Foreign Investors

Oman

There are over 6,000 Indian businesses and enterprises in Oman, representing a significant investment of over US$7.5 billion. Many established Indian merchant families have made Oman their home and contributed to the country’s economic history, with businesses spanning multiple generations.

Recently, the country is emerging as a hub for manufacturing, logistics, and green energy projects anchored around Duqm SEZ, Sohar, and Salalah. India’s ACME is building a large green ammonia complex at Duqm with long-term offtake agreements, highlighting the bankability of energy transition ventures. However, investors must prepare for workforce localization under new Omanization policies.

Qatar

According to the Qatar Chamber of Commerce and Industry (QCCI), there are over 20,000 Indian companies – both wholly owned enterprises and joint ventures – operating in Qatar.

Kuwait

Kuwait has a strong Indian footprint in Kuwait – ranging from public sector enterprises (PSUs) to private conglomerates and consumer brands – demonstrates the scale of bilateral economic engagement. Indian companies are deeply integrated into Kuwait’s infrastructure development, energy security, IT, financial services, and retail markets, supporting Kuwait’s growth agenda while expanding India’s global corporate influence.

Major names include Larsen & Toubro (L&T), Shapoorji Pallonji, Kalpataru Power Transmission Ltd, Afcons Infrastructure, KEC International, TCS, and Tech Mahindra.

Beyond EPC and IT, a wide range of Indian consumer and industrial brands operate in Kuwait, reflecting the depth of bilateral economic ties. These include:

• Automotive: Tata Motors, Ashok Leyland, Hero MotoCorp, Bajaj, TVS, Eicher Motors.
• Jewelry and retail: Malabar Gold & Diamonds, Kalyan Jewellers, Joyalukkas, Titan (Tata Group).
• Healthcare and FMCG: Himalaya.
• Aviation: Air India Express, Akasa Air, Indigo.

Bahrain

At a press interaction in September 2024, Noor bint Ali Alkhulaif, Bahrain’s Minister of Sustainable Development and Chief Executive of the Bahrain Economic Development Board (EDB), along with Ali Al Mudaifa, the EDB’s Chief of Business Development, highlighted Bahrain’s growing focus on attracting Indian investments.

The officials outlined opportunities in five priority sectors – financial services, ICT and digital economy, logistics, manufacturing, and tourism – where Bahrain is positioning itself as a competitive hub. With a liberal regulatory framework, 100 percent foreign ownership in most industries, and strategic connectivity across the GCC, Bahrain is actively courting Indian companies looking for a regional base to expand into Middle Eastern and North African markets.

GCC sectors appealing to Indian investors

Several sectors in the Middle East are proving especially attractive to Indian investors, each offering unique opportunities for growth and partnership. In energy transition and petrochemicals, Indian firms are participating in projects related to green hydrogen and ammonia in Oman, as well as carbon capture, utilization, and storage (CCUS) and specialty chemicals in the UAE and Saudi Arabia. The EPC, infrastructure, and construction space is another major draw, with Indian companies eyeing Saudi Arabia’s Vision 2030 megaprojects and large-scale utilities and industrial park developments across the GCC.

On the consumer side, the region’s retail and e-commerce sectors benefit from high-income demographics and mall-driven ecosystems.

In IT, BPO, consulting, and engineering services, Indian firms are setting up regional headquarters-led models to deliver shared services and support hubs, particularly in Riyadh, Dubai, and Abu Dhabi.

Logistics and re-export activities are also expanding, with UAE and Qatar developing world-class air–sea multimodal hubs to serve as gateways to wider Middle East and African markets.

Finally, healthcare and education continue to attract Indian investment, supported by strong public–private partnership activity and country-specific licensing frameworks that encourage private sector participation in building modern service ecosystems.

Key attractions

• Ownership and mobility: 100 percent foreign ownership (with carve-outs), long-term residencies (UAE Golden Visa; Saudi Premium Residency; Oman Investor Residency).
• Tax clarity: Predictable CIT; Pillar Two top-ups in UAE and Bahrain for large MNEs.
• Rule-of-law venues: DIFC/ADGM/QICDRC courts for cross-border disputes.
• Entrepreneur-friendly policies, including free zones, golden visas, and low/nil corporate tax rates or tax holidays.
• India-GCC trade rails: CEPA duty cuts; local-currency/UPI initiatives reduce friction and FX costs.

UAE a major Middle East destination for Indian startups

Indian tech startups are increasingly choosing the Middle East – particularly the UAE – as their first overseas market. Cybersecurity firm Protectt.ai raised US$8.7 million in Series A funding and set up operations in Dubai, citing the burgeoning fintech and banking ecosystem as a key draw. Others such as Kluisz.ai, Doqfy, and Ringg.ai are similarly expanding to Dubai to tap into rapidly rising demand for cloud, AI, and fintech solutions. Fast-growing marketplace Nykaa has also established UAE subsidiaries, while fintech innovator InCred deepened its presence by acquiring Dubai-based Arrow Capital.

In 2024, Indian startups raised around US$200 million from Middle East-based investors, marking a notable increase in cross-border venture capital activity. Several Indian VC firms have anchored operations in the UAE to harness this momentum. For instance, 100Unicorns – India’s largest early-stage accelerator fund – launched its first international office in ADGM in December 2024. Meanwhile, established players like Stellaris Venture Partners and Blume Ventures continue to tap capital from the region, while Ideaspring Capital and Java Capital are actively cultivating relationships with UAE family offices and high-net worth Indians (HNIs).

Key business considerations for Indian investors in the GCC

When setting up or expanding operations in the Middle East, Indian investors must carefully evaluate several business and investment considerations. The market entry route is a critical first step, with options ranging from a mainland entity, a Free Zone company, or a branch/representative office, to a RHQ in Saudi Arabia – a requirement for bidding on Saudi government contracts. Ownership flexibility also comes with limits: while the UAE permits 100 percent foreign ownership, strategic impact sectors such as defense, banking, and telecom remain restricted, making it essential to validate the relevant activity code before incorporation.

People and localization policies – such as Emiratization, Saudization, and Omanization – must also be factored in, as they affect bid eligibility, workforce planning, and operational costs.

When seeking incentives, under the UAE’s corporate tax law, businesses must assess their eligibility for Free Zone benefits, which hinge on generating qualifying income and meeting transfer pricing compliance standards.

Multinational groups with global revenues of €750 million or more also need to evaluate their exposure to Pillar Two Domestic Minimum Top-Up Taxes (DMTT), now in effect in jurisdictions like the UAE and Bahrain.

Investors must also secure the right regulatory licenses, since activities in financial services, virtual assets, healthcare, education, media, and construction often require both zone-level and federal approvals, particularly in markets such as Saudi Arabia and Qatar.

Contracts and dispute resolution mechanisms should be structured carefully, with many companies opting for DIFC or ADGM law and courts in the UAE, or arbitration clauses, to reduce cross-border risks.

Finally, payments and foreign exchange considerations are increasingly important, with tools such as AED-INR local currency settlement and UPI acceptance in the UAE improving cost efficiency and customer reach for Indian businesses.

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