BENGALURU - India has emerged as a key beneficiary of private investment from the Middle East in the last three years as diplomatic pacts facilitated deals and investors sought to tap into the South Asian country's growing market potential, a report has shown.

Cross-border investment activity from the Middle East to Asia has gained momentum, according to a report by the Global Private Capital Association (GPCA), with total cross-regional private capital deal values cumulatively reaching $83 billion since 2020, compared to $14 billion between 2016 and 2019.

India accounted for more than half of all Asia deals with Middle East investors and 58% of the capital invested in Asia during the period, outpacing China and Southeast Asia.

The country has led Asian markets "driven by strong SWF (Sovereign Wealth Fund) interest in leading tech and consumer digital platforms such as Jio Platforms, Flipkart and Reliance Retail Ventures," the report, released last week, stated.

Overall foreign direct investment flows into the country had steadily increased till 2021-22, but dipped in the last two years, according to data from the Department of Promotion of Industry and Internal Trade. In the nine months ended December 2023, India attracted FDI inflows of $51.5 billion.

"India's relatively strong economic growth prospects seem to be a key reason why the country is drawing in greater investment from public asset owners, including those from the Middle East," said Nikhil Sanghani, managing director, Economic and Monetary Policy Institute at OMFIF.

"There are longer-term structural factors that also favour India's economy, such as its positive demographic outlook, rapid digitalisation and financial deepening."

Abu Dhabi's sovereign wealth fund Mubadala Investment Company and Goldman Sachs announced last week that they had agreed to a $1 billion private credit partnership to invest in Asia Pacific, with particular focus on India.

Mubadala also bought a minority stake in Indian private hospital chain Manipal Hospitals in February.

Meanwhile, the Abu Dhabi Investment Authority (ADIA) invested $598 million in Reliance Retail Ventures last October and $500 million in India's Lenskart in March 2023.

Diplomatic and trade agreements between the two regions, such as the UAE-India Comprehensive Economic Partnership and the expansion of BRICS, paved the way for private capital partnerships, the GPCA report said.

Global leaders also announced the India-Middle East-Europe Economic Corridor last year, seeking to counter China's Belt and Road push on global infrastructure.

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Pooja Desai)