Why Are the Middle East and Africa Bright Spots for Business with India? | Other

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Strengthening capital flows between India and the Middle East
Strategic opportunities for investors and corporates in Africa
Sector spotlights and key legal considerations
Outlook and overcoming barriers to entry

Strategic pathways for trade and investment exist between the Middle East and India, as well as Africa and India. In FY 2023–24, India’s trade with the Gulf Cooperation Council (GCC) countries reached USD 162 billion, of which imports constituted USD 105.9 billion and exports, USD 56.3 billion.¹ Sovereign wealth fund investments are also significant in areas such as infrastructure, real estate, energy, and technology, while private equity investments in Gulf-anchored funds continues to bolster sentiment for continued uptick in activity between the two jurisdictions.

India is a core market partner for Africa when it comes to trade and investment, with bilateral trade across between the two exceeding USD 80 billion between 2023 and 2024. On the continent, India’s top trading partners are South Africa, Tanzania and Nigeria, with trade between India and South Africa alone accounting for USD 19.25 billion over the same 2023 to 2024 period.² For Indian businesses, the continent continues to offer several opportunities across a variety of sectors.

Strengthening capital flows between India and the Middle East

Capital flows between India and the Middle East, especially the GCC, are accelerating on the back of aligned policy and market plumbing. The proposed India-Middle East-Europe Economic Corridor (IMEC) underscores the region’s role as a connectivity hub, promising to enhance logistics efficiency and attract cross-border financing for large-scale infrastructure and green energy projects.

Recent policy developments set the stage for deeper investment links between India and the GCC, with the UAE emerging as a pivotal partner. The India–UAE Comprehensive Economic Partnership Agreement (CEPA) has not only boosted bilateral trade volumes, but also created a framework for investment flows in strategic non-oil trade sectors — strengthening deal pipelines in renewable energy, healthcare, advanced manufacturing and digital infrastructure.

Bilateral investment treaties, including the recent India–UAE Bilateral Investment Treaty, provide enhanced investor protections and greater legal certainty. Parallel efforts to integrate digital payment systems linking India’s Unified Payments Interface (UPI) with the UAE’s AANI (UAE’s instant payment platform, developed by Al Etihad Payments) and enabling local currency settlement are expected to further reduce friction in trade, travel and remittance flows. Such measures and policy shifts lower structural barriers, positioning the India–Middle East corridor as a dynamic and scalable channel for cross-border investment.

Moreover, the presence of a substantial Indian and broader Asian community within the GCC provides a natural bridge for deepening bilateral capital flows. This demographic presents a growing market for Indian products, spanning sectors such as retail, fashion, food, agriculture, and healthcare. As demand continues to evolve, it provides Indian businesses with a unique platform to scale their presence in the GCC and the wider Middle East, while simultaneously reinforcing two-way investment and trade flows.

We are at an inflection point where the India–Middle East corridor is moving beyond traditional trade into a phase of strategic investment and sustainable growth. Those who anticipate the policy direction, align their strategies early and structure deals to leverage these frameworks will not just participate in the growth corridor — they will help to shape it.
— Abeer Jarrar, Partner, Dubai

Strategic opportunities for investors and corporates in Africa

The African Continental Free Trade Area (AfCFTA) is unlocking significant opportunities for Indian companies to expand exports, launch manufacturing hubs, and form strategic partnerships across sectors such as healthcare, agriculture, and green energy.

By dramatically increasing intra-African trade, AfCFTA enables Indian firms to diversify and reinforce their global supply chains. Reduced tariffs and harmonized standards further facilitate access for Indian exporters to multiple African markets, making entry and operations more efficient.

India’s trade relations with Africa are strengthened through preferential arrangements like the Duty-Free Tariff Preference (DFTP) Scheme and Bilateral Investment Treaties (BITs) with select African nations, rather than formal free trade agreements. These frameworks support Indian business involvement in mining, textiles, pharmaceuticals, and services.

Sector spotlights and key legal considerations

	Opportunities with Africa	Opportunities with the Middle East
Digital Infrastructure and Fintech	Indian fintech and telecom innovations have helped expand financial inclusion and e-governance across Africa. Africa’s so-called mobile-first economy is a natural fit for Indian IT, telecommunications and fintech solutions, particularly in light of the increasing demand for digital payments, microfinancing, and e-commerce.	Indian fintechs are partnering leading banks and free zones frameworks to drive cross-border payment integration. Gulf sovereign and private capital is targeting India’s fastest-growing sectors, including logistics and digital infrastructure. These flows offer investors scalable growth opportunities underpinned by policy support, regulatory reforms and strong regional demand.
Manufacturing	India offers adaptable and affordable manufacturing technologies, fostering collaboration in sectors such as textiles, electronics, and chemicals.	Opportunities in the Middle East for India’s manufacturing sector are expanding as GCC economies diversify away from hydrocarbons and invest heavily in industrial capacity under their national visions. Joint ventures and cross-border manufacturing platforms — supported by incentives in free zones across the UAE and Saudi Arabia — create channels for Indian companies to integrate into regional value chains.
Healthcare and Life Sciences	Indian pharmaceutical firms supply affordable medicines and invest in health infrastructure, with opportunities for more collaboration in local manufacturing and digital health.	The healthcare sector in the GCC has witnessed remarkable growth, driven by an increasing demand for local manufacturing and the transfer of technology. Significant regulatory changes aimed at aligning the healthcare sector with Western standards include provisions that allow foreign investments in this strategic sector. The liberalization of foreign investment policies opens new avenues for Indian companies to establish a strong presence in the GCC healthcare market. Indian expertise will play crucial roles in both services and manufacturing perspectives.
Energy and Infrastructure	India’s experience in renewable energy aligns with Africa’s sustainable energy goals, encouraging joint environmentally friendly energy initiatives. Solar and wind energy projects, especially in East and Southern Africa, are ripe for investment by Indian Engineering, Procurement & Construction and technology firms. Indian firms can contribute to Africa’s connectivity goals through the provision of financing for roads, ports, and other critical infrastructure.	The GCC’s energy transition and infrastructure expansion present Indian investors with large-scale opportunities in renewables, hydrogen, transport, and smart cities. Indian Engineering, Procurement, and Construction (EPC) and technology providers bring cost-competitive expertise and scalable technology solutions.

Outlook and overcoming barriers to entry

Given the diversity in economies, Indian businesses should be alive to the need to take a differentiated approach toward specific countries, based on the sizes of consumer markets and domestic industries.

In a transformative shift across India and the Middle East (including most GCC countries) liberalization policies now open the doors to partial and (in some cases) majority ownership across various sectors. The outlook is positive as the Indian and GCC governments continue to work closely with India to further reduce barriers to entry. Indian companies are poised to benefit from this liberalization, as they can now establish a local presence either directly or through joint ventures.

Barriers to entry to the GCC are going down, and Indian companies should be first in line to benefit from the huge demand and purchase power across all sectors.
— Hani Naja, Partner, Dubai

Ongoing diplomatic efforts — such as proposals for a transformative trade agreement with the Southern African Customs Union (SACU) — point to the potential for even deeper economic and investment ties between India and Africa in the future.
— Virusha Subban, Partner, Johannesburg

All in all, multinationals can, and should, leverage the India–Africa and Middle-East corridors to:

Co-invest with Indian firms: Joint ventures with Indian partners can offer cost-effective entry into these markets.
Tap into blended finance: Development finance institutions and sovereign funds are increasingly supporting sustainable infrastructure and climate projects in both the Middle East and Africa.
Build local capacity: Investing in vocational training and local hiring enhances brand equity and long-term sustainability.
Drive innovation: Demographic diversity and digital potential present a fertile ground for innovation in tech and telecommunications from fintech to health- and agritech.

Footnotes:

1. APAC News Network, “India-Gulf Relations: $162 Billion Trade and Expanding Strategic Ties,” 2025.

2. Confederation of India Industry, “Pathways for Shared Progress,” 2024.

This article is being provided as general information and does not constitute legal advice. Baker McKenzie does not practice Indian law and where Indian law advice is needed, we work closely with top India-qualified lawyers. We’d be happy to discuss your needs in India. For more information, please contact Mini Menon vandePol.

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