In This Economy: Dubai Dreams, Indian Money, And ED’s Radar: What’s Going On?

Happy Tuesday, Readers! 

For years now, Dubai has been a home away from home for India’s rich—not just for luxury shopping and Instagram sunsets, but also for setting up businesses, buying property, and quietly moving capital. With its shiny promise of zero income tax, quick company setup, no capital gains tax, and long-term residency, the city has turned into a top destination for India’s entrepreneurs, influencers, and high-net-worth individuals (HNIs). But now, that flow of money—and people—has caught the attention of Indian authorities.

The Indian government is preparing to write formally to the UAE, asking for financial and ownership details in connection with an Enforcement Directorate probe. At the heart of it is a growing list of Indian HNIs who have allegedly used mule accounts and shell companies to transfer funds to Dubai—bypassing Indian banking rules, taxes, and FEMA guidelines.

The move to seek details comes just days after the UAE government had to clarify misleading claims about relaxing Golden Visa rules specifically for Indian citizens—a rumour that sparked a fresh wave of interest in applications. 

Dubai-based immigration consultants say interest from Indians has doubled since early 2024, especially from tier-1 cities and startup founders.

On to the newsletter…

Indians are now the largest foreign investors in Dubai real estate. In 2023 alone, they bought properties worth over Rs 35,000 crore (approximately $4.2 billion), as per the industry estimates. There are over 3.8 million Indian expats in the UAE, the largest diaspora group—and an increasing number are settling in Dubai not as workers, but as investors, founders, and influencers. The UAE’s Golden Visa scheme, launched in 2019, has granted tens of thousands of long-term residencies, with Indians among the top applicants.

No personal income tax, 100% ownership allowed in Free Zones, fast-track incorporation—companies can be set up in under a week, global banking access plus crypto-friendly policies, and critical distance from India’s tax net, at least until now.

ED has flagged a network of benami accounts and mule transactions—often using temporary accounts held by economically weaker sections, particularly in eastern India, active for just hours—through which hundreds of crores have been routed overseas.

With the ED tightening its probe and India invoking the India-UAE Exchange of Information Treaty, the walls are closing in on fund movements once considered clean and quiet.

Authorities are now tracking where that money landed, often in Dubai-based offshore companies, real estate deals, or layered investment structures.

To be clear, not every Indian in Dubai is under suspicion. Many are legitimately globalising, diversifying risk, or planning for a tax-neutral future. But this probe shows that Dubai is no longer the black box it used to be, at least not for Indian enforcement agencies.

A formal request for data from the UAE’s financial authorities, a deep dive into Indian-linked companies registered in UAE Free Zones, and scrutiny of celebrity and influencer accounts—some of whom are also being investigated in other parallel cases like online betting. 

For now, the dream of Dubai is alive, but it’s being redefined. The perks are still there—the skyline, the tax benefits, the speed of doing business—but the secrecy is running out of room.

If you’re building globally, great. But if you thought Dubai was an easy off-ramp to move untaxed money, you might want to think again.

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• State GST departments in at least 6-7 states have issued notices to nearly 60,000 unregistered businesses found operating outside the tax net despite crossing the mandatory turnover threshold, I report.

• While India's banking regulator remains open to the idea of allowing foreign banks to own a 26% stake in domestic lenders, private equity firms will likely not get approvals, sources tell Vishwanath Nair.

• The effective salary hike for central government employees under the 8th Pay Commission is likely to be 13%, which will be lower than around 14.3% under the 7th Pay Commission, Mohammed Uzair Shaikh writes based on a Kotak report.

• A team from the United States will be in India in August for the next round of negotiations for a bilateral trade deal, sources tell Rishabh Bhatnagar.

There’s workplace romance, and then there’s getting caught on a kiss cam in front of thousands. The CEO of Astronomer, a tech company, ended up resigning after a Coldplay concert clip went viral—he was seen hugging his HR head during the show. The company first put them both on leave, then said its expectations around conduct and accountability weren’t met. That’s all it took. One concert, one camera, one decision that couldn’t be undone.