India is closing 2025 by shedding its macroeconomic volatility, offering MENA allocators a safe haven at a time when emerging markets are grappling with currency volatility and high interest rates. Real GDP growth hit a six-quarter high of 8.2% in 2Q 2025-26 alongside improving jobs data, while inflation decelerated throughout the year to 0.71% in November, according to the Press Information Bureau.

The corridor’s stability has reached a definitive Goldilocks moment: For the UAE and Saudi Arabia, this provides the necessary stability to deploy the USD 100 bn in committed corridor capital. India is now the world’s fourth-largest economy at USD 4.18 tn — overtaking Japan — and could move ahead of Germany within three years, the government says, PTI reports. The economy has decoupled from global trade headwinds, backed by a 4.7% unemployment rate — the lowest since April — while Gross Value Added rose 8.1%, driven by industry and services.

There’s more growth to come: Multilateral institutions including the World Bank, IMF, and OECD expect growth above 6% through 2025-26, keeping India at the front of the global growth table.

What this means for GCC capital

India’s macroeconomic performance is likely to reinforce shifts in how Gulf sovereign funds and energy exporters assess long-term exposure to India’s fast-growing market, according to PTI. This stability removes the currency risk that has historically deterred massive Gulf sovereign wealth deployment, and resets pricing logic on both capital and hydrocarbons.

GCC sovereign funds (Adia, PIF, QIA, Mubadala, ADQ) are deploying record volumes abroad, and a USD 4.18 tn, 8% growth India is now big enough to take platform-size tickets in renewables, infrastructure, data centers, and logistics — not just minority tech stakes. On the energy side, India’s scale locks in strategic relevance, sourcing over 80% of its needs from abroad, with the GCC still structurally central despite temporary Russian discount swings. These are all signals to Riyadh, Abu Dhabi, and Doha that India is no longer a tactical trade — it’s a demand anchor and investment destination, warranting longer-dated supply terms, downstream co-ownership and corridor-linked infrastructure over ad-hoc transactions.

The Reserve Bank of India’s delivery of 125-basis-point rate cuts throughout 2025 also ramps up the pull factor for Gulf capital. This monetary easing lowers hurdles for large-scale industrial projects, allowing the necessary scale for the USD multi-mn deployments planned by the likes of Adia, PIF, and Mubadala.

What comes next? With CPI below 1%, the Reserve Bank of India is expected to maintain its “supportive monetary stance” to further cut rates in early 2026, as per Hindu Businessline. This could lower the cost of capital for Gulf-backed infrastructure projects in the country.

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