India has agreed to give Saudi Arabia’s Public Investment Fund (PIF) a special exemption from certain foreign investment rules. The move is aimed at attracting more capital and boosting financial ties between the two countries, according to Reuters sources.
PIF holds major stakes in Jio and Reliance Retail
Saudi Arabia’s Public Investment Fund is one of the largest in the world, managing around $925 billion in assets. In India, it currently holds $1.5 billion in Jio Platforms and $1.3 billion in Reliance Retail.
India, the world’s third-largest oil importer, is looking to secure long-term capital from energy-rich Gulf countries. At the same time, Saudi Arabia is expanding its presence in fast-growing economies like India under its Vision 2030 plan, which aims to reduce the Kingdom’s dependence on oil revenues.
What are the Indian rules?
According to Reuters sources, India’s rules club all investments made by different sovereign arms of a country under one limit and cap the total investment at 10 per cent in a single Indian company. As a result, this rule was restricting how much different parts of the Saudi wealth fund could invest in India.
With the new exemption, various arms of the fund can invest separately, enhancing their flexibility in deploying capital into Indian equity markets without breaching regulatory thresholds, said one of the sources.
The Indian Finance Ministry and the Saudi fund have not commented on the development, Reuters reported.
India, Saudi Arabia agree to boost ties
Prime Minister Narendra Modi visited Saudi Arabia in April this year. During the visit, the two nations agreed to boost investment in key sectors such as energy, infrastructure, and pharmaceuticals.
India and Saudi Arabia are also negotiating a bilateral investment treaty (BIT). “The two sides affirmed their desire to complete negotiations on the BIT at the earliest,” a joint statement from April said.
To deepen cooperation, India and Saudi Arabia set up a high-level task force in 2024. Its aim is to fast-track Riyadh’s plan to invest $100 billion in India.
“The progress made by this Task Force in areas such as taxation was also a major breakthrough for greater cooperation in the future,” the joint statement said.
There are also reports that the Indian government is considering tax relief for the Saudi fund to support investment in infrastructure and energy, Reuters reported.