Saudi Investment in Indian Infrastructure

By Manu Rao | Updated March 2026

The Scenario

A family-owned investment firm based in Riyadh manages a portfolio of SAR 2 billion (approximately $530 million) across real estate, hospitality, and infrastructure in the GCC region. The firm's managing director has been tracking India's infrastructure boom and wants to deploy SAR 200 million (about $53 million or Rs 450 crore) into Indian highway and logistics projects over the next five years. The plan is to acquire stakes in operational toll roads and invest in greenfield logistics parks near industrial corridors. The firm has no prior Indian operations and no Indian staff.

They need an Indian entity to hold these investments, manage the portfolio, and eventually house a small local team for deal sourcing and project oversight.

Why India?

India is spending over Rs 10 lakh crore annually on road infrastructure. The National Highways Authority of India (NHAI) has built over 10,000 km of highways in FY2025, and the Bharatmala Pariyojana program targets 65,000 km of national highway development. The PM Gati Shakti initiative connects 16 ministries on a single infrastructure planning platform.

For a Saudi investor, the appeal is yield. Operational toll roads in India generate equity IRRs of 14-18%, backed by long-term concession agreements. Logistics parks near industrial corridors (Delhi-Mumbai, Chennai-Bengaluru) offer even higher returns as India's warehousing demand grows at 15-20% annually. Compare this to the 6-8% yields available on Gulf infrastructure assets.

Saudi-India economic ties have deepened sharply. Saudi Arabia is India's fourth-largest trading partner, bilateral trade crossed $52 billion in FY2025, and the Saudi Public Investment Fund (PIF) has made major investments in Indian companies including Reliance Jio. The Vision 2030 diversification strategy in Saudi Arabia actively encourages outbound investment in growth markets.

Entity Choice

Given the scale and nature of the investment (acquiring stakes in multiple projects), the firm needs a Private Limited Company that functions as an Indian holding and investment company. This entity will:

• Acquire equity stakes in operational toll road SPVs
• Invest in greenfield logistics projects through project-level SPVs
• House a small local team (5-8 people) for deal sourcing, due diligence, and portfolio management

Each infrastructure investment will typically be in a separate project SPV (the standard structure in Indian infrastructure). The holding company either takes a stake in an existing SPV or creates a new one for greenfield projects.

An LLP was considered for the holding entity, but Indian banks and infrastructure funds are more comfortable with Private Limited companies as co-investors. Also, Infrastructure Investment Trusts (InvITs) — which the firm may eventually use to exit investments — require holdings in company form.

FDI Route and Sector Rules

Infrastructure (roads, highways, bridges, logistics) allows 100% FDI under the automatic route. Road development under BOT (Build-Operate-Transfer), DBFOT (Design-Build-Finance-Operate-Transfer), and TOT (Toll-Operate-Transfer) models are all open to 100% foreign investment.

Key regulatory considerations:

• NHAI TOT bundles — NHAI auctions operational toll road bundles under the TOT model. Foreign investors can bid directly or through Indian entities.
• State highway concessions — Each state has its own highway development authority that grants concessions.
• Warehousing and logistics — The Logistics Policy 2022 treats logistics as a priority sector. SEZ/FTWZ (Free Trade Warehousing Zone) benefits may apply.

Saudi Arabia is not a Hague Apostille Convention member. Documents must be attested through the Saudi Ministry of Foreign Affairs and then the Indian Embassy in Riyadh or the Indian Consulate in Jeddah. This adds 7-14 business days to the document preparation process.

Registration Process

• Document Attestation — Saudi commercial registration (Sijil Tijari from the Ministry of Commerce), board resolution, directors' passport copies, and bank reference letters attested through Saudi MOFA and then the Indian Embassy in Riyadh.
• DSC and DIN — For the Saudi directors and the appointed Indian resident director.
• SPICe+ Filing — Incorporation of the Indian holding company.
• Post-Incorporation — Bank account (select a bank with infrastructure finance capability — SBI, ICICI, Axis, or HDFC Bank), PAN, TAN, GST registration.
• RBI Filings — Form FC-GPR after share allotment, FLA return annually.
• SEBI Registration — If the investment structure involves pooled capital from multiple Saudi investors, SEBI registration as a Foreign Portfolio Investor (FPI) or Alternative Investment Fund (AIF) may be required. If it is a single family office investing through one Indian entity, SEBI registration is typically not needed.

Timeline: 4-5 weeks for incorporation (including the longer attestation process). Setting up the investment team and completing the first deal will take 3-6 months depending on deal pipeline.

Tax Structure

India and Saudi Arabia have a DTAA in force since 2006. Key rates:

Infrastructure-specific tax benefits:

• Section 80-IA — Infrastructure undertakings (roads, bridges, ports) can claim a 10-year tax holiday (100% for first 5 years, 30% for next 5 years out of 20 years from the date of commencement)
• Section 115BAA — 25% corporate tax (the 80-IA benefit and 115BAA are mutually exclusive — the company must choose one)
• Capital gains on InvIT units — If the firm eventually exits through an InvIT listing, long-term capital gains on listed InvIT units are taxed at 12.5% (holding period threshold: 36 months for unlisted, 12 months for listed units)

Saudi Arabia has no personal income tax. Saudi corporate tax (Zakat for Saudi nationals, 20% income tax for foreign shareholders) applies to the Saudi firm's income. Dividends received from India, after the 10% Indian withholding, are added to the Saudi firm's income. The Saudi firm should ensure it can claim credit for Indian taxes in its Saudi zakat/tax computation — or structure through an appropriate holding jurisdiction if the amounts are large.

Ongoing Compliance

• MCA filings — For the holding company and each project SPV: board meetings, AGM, MGT-7A, AOC-4
• Tax — Corporate tax returns (with 80-IA claims if applicable), advance tax, TDS returns
• GST — Toll collection is exempt from GST under Notification 12/2017 for national highways. Logistics services attract 18% GST.
• NHAI/State Highway reporting — Periodic traffic data, toll collection reports, maintenance compliance for concession agreements
• Transfer pricing — Management fees charged by the Saudi firm to the Indian entity are related-party transactions
• RBI FLA Return — Annual filing for each entity with foreign investment

Common Pitfalls

• Not accounting for the embassy attestation timeline — The Indian Embassy in Riyadh processes document attestation in batches. During peak periods (Hajj season, Ramadan), processing times can double. Start the attestation process 4-6 weeks before the planned incorporation date.
• Misunderstanding toll road concession structures — Indian toll road concessions come in multiple forms (BOT-Toll, BOT-Annuity, HAM — Hybrid Annuity Model, TOT). Each has a different risk-return profile. TOT involves acquiring an already-operational road (lower risk, lower return). BOT involves construction risk. HAM splits the risk between government and concessionaire. Get a sector specialist to evaluate each opportunity.
• Ignoring state-level approvals for logistics parks — A logistics park requires state-level permissions including land use change (if converting agricultural land), environmental clearance, fire NOC, and connectivity approvals from state highway authorities. Each state has different timelines and processes.
• Not planning for exit — Infrastructure investments are illiquid. The Saudi firm should structure investments with clear exit mechanisms from the start — InvIT listing, secondary sale to another fund, or buyback by the concession authority. The holding company structure should allow for clean exits without triggering unnecessary tax liabilities.

How Beacon Filing Helps

Beacon Filing assists Saudi investment firms with Indian entity setup, including coordination with the Indian Embassy in Riyadh for document attestation. We handle holding company incorporation, project SPV formation, and the FEMA filings required for each investment tranche.

For ongoing portfolio management support, our compliance packages cover MCA, tax, and RBI filings for the holding company and each underlying SPV — providing consolidated reporting to the Riyadh head office.

Full guide: Register a Company in India from Saudi Arabia

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