India has agreed to exempt Saudi Arabia’s Public Investment Fund (PIF), its sovereign wealth fund, from certain foreign portfolio investment rules. This move aims to boost capital inflows and deepen financial ties between the two countries, according to sources familiar with the matter.
Currently, Indian regulations require investments from different sovereign entities to be combined and capped at 10% in any single company. This rule has limited the ability of PIF and its subsidiaries to invest more freely in India.
The exemption will allow PIF’s various arms to invest independently, giving them greater flexibility to increase their stakes in Indian companies without breaching regulatory limits.
This development follows Indian Prime Minister Narendra Modi’s visit to Saudi Arabia in April. During the visit, both nations agreed to promote investments in sectors such as energy, infrastructure, and pharmaceuticals. India is also negotiating a bilateral investment treaty with Saudi Arabia to further facilitate such cooperation.
The Public Investment Fund is one of the world’s largest sovereign wealth funds, managing assets worth about $925 billion. Despite its size, its current investments in India are limited, including $1.5 billion in Jio Platforms and $1.3 billion in Reliance Retail.
India, the world’s third-largest oil importer, seeks to attract long-term capital from Gulf nations like Saudi Arabia. Meanwhile, Saudi Arabia aims to diversify its investments globally under its Vision 2030 plan. To support these goals, the two countries formed a high-level task force in 2024 to expedite Riyadh’s plan to invest $100 billion in India.
The task force has made progress on issues such as taxation, which is seen as a major breakthrough for future cooperation. Recent reports also indicate that India is considering offering tax reliefs to PIF, including a possible 10-year tax holiday and streamlined exemptions on dividends, interest, and capital gains related to infrastructure investments.
Both the Indian Finance Ministry and Saudi Arabia’s Public Investment Fund have not commented on the exemption or tax relief discussions.
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