India on Thursday signed a bilateral investment protection agreement with the United Arab Emirates (UAE), a move that is expected to attract massive foreign direct investments (FDIs).

UAE foreign minister Sheikh Zayed Al Nahyan and India's external affairs minister Salman Khurshid signed the Bilateral Investment Promotion & Protection Agreement (BIPPA) in New Delhi yesterday.

The agreement will allow India, which is keen on attracting big-ticket investments, to tap UAE's $600-billion sovereign wealth fund, which is the world's second largest sovereign wealth fund. Currently, UAE's investment in India stands at just US$3 billion.

Earlier this year, the two countries set up a high-level taskforce on investments, which will now hasten investment opportunities. It first met in February this year, but didn't make any decision as UAE said it wanted BIPPA to be signed first.

Abu Dhabi National Energy Co has plans to invest $700 million in the electricity sector in Himachal Pradesh; while DP World Operations is looking to expand its presence in India's port sector.

Signing of the pact is being seen as the first step toward reviving talks on a free trade agreement between the two countries. India now has similar pacts with all the GCC nations.