Prime Minister Narendra Modi’s visit to Cyprus. Business & Investing impact for Indian Investors.

Prime Minister Narendra Modi’s visit to Cyprus on June 15-16, 2025, marked a significant step in strengthening economic ties between India and Cyprus, with several implications for Indian investors. The visit, the first by an Indian PM in over 20 years, focused on enhancing trade, investment, and strategic partnerships, positioning Cyprus as a gateway for Indian businesses into Europe. Below is an analysis of the business and investment impacts for Indian investors based on the outcomes of the visit.

Key Business and Investment Impacts for Indian Investors

Enhanced Market Access via Cyprus as a Gateway to Europe

Cyprus is strategically positioned in the Eastern Mediterranean, serving as an EU member state and a logistical hub for the India-Middle East-Europe Economic Corridor (IMEC). Modi emphasized Cyprus’s role as a “gateway to Europe” for Indian companies, supported by its advanced financial services, favorable tax regime, and robust shipping industry.

Impact for Indian Investors:

• The Double Taxation Avoidance Agreement (DTAA), revised in 2016, ensures favorable tax treatment, preventing base erosion and profit shifting, making Cyprus an attractive destination for Indian investments.
• Cyprus’s Category-I Foreign Portfolio Investor status with India facilitates easier investment flows for Indian institutional investors.
• The agreement between the Cyprus Stock Exchange and GIFT City in Gujarat for dual listings, research, and outreach programs opens new avenues for Indian investors to access European capital markets.

New Investment Opportunities in Key Sectors

• The visit saw the signing of several Memoranda of Understanding (MoUs) between Indian and Cypriot businesses, focusing on fintech, technology, renewable energy, shipping, logistics, and the filming industry.
• Impact for Indian Investors:
  • Fintech: The MoU between Eurobank and the National Payments Corporation of India (NPCI) to introduce UPI-based cross-border payments in Cyprus (and Greece) creates opportunities for Indian fintech companies to expand services in Europe, benefiting investors in India’s digital payment sector.
  • High-Tech and Innovation: Collaboration in high-tech industries, as highlighted by Marina Zevedeou of WICCI-Cyprus, offers Indian tech firms and investors opportunities to tap into Cyprus’s innovation ecosystem, particularly in AI and IT.
  • Renewable Energy and Shipping: Cyprus’s role in Eastern Mediterranean natural gas exploration and its established shipping industry align with India’s focus on energy security and maritime development, encouraging Indian investors to explore partnerships in these sectors.
  • Filming Industry: Incentives like Cyprus’s IP box regime and filming industry support provide new avenues for Indian media and entertainment investors.
  • Indian investors can participate in joint ventures or direct investments in these sectors, supported by Cyprus’s investor-friendly policies.

Strengthened Financial Cooperation

The MoU between the National Stock Exchange (NSE) and the Cyprus Stock Exchange, along with the Bombay Chamber of Commerce and Cyprus Chamber of Commerce, promotes trade and investment. Eurobank’s plan to open a representative office in Mumbai further strengthens financial ties.

Impact for Indian Investors:

• The NSE-Cyprus Stock Exchange collaboration enables dual listings, allowing Indian companies to raise capital in Europe, benefiting investors through increased liquidity and market exposure.
• Eurobank’s Mumbai office will facilitate smoother capital flows between India, Europe, the Middle East, and Africa, creating opportunities for Indian investors in cross-border financial services.
• The India-Greece-Cyprus (IGC) Business and Investment Council fosters trilateral collaboration in shipping, logistics, aviation, and digital services, offering Indian investors diversified investment options.

Increased Trade Potential

Bilateral trade between India and Cyprus was $136.96 million in 2023–24, with potential for significant growth, as Modi noted the “immense potential” for expanding economic ties.

Impact for Indian Investors:

• Indian investors in export-oriented sectors like manufacturing, logistics, and technology can benefit from increased trade with Cyprus, especially through its coastal ports, which align with India’s maritime and port development initiatives.
• The focus on India’s digital revolution (e.g., UPI) and manufacturing mission creates opportunities for Indian investors to partner with Cypriot firms in high-growth sectors.
• Cyprus’s upcoming EU Council presidency in 2026 positions it to advocate for India’s interests in the India-EU Free Trade Agreement (FTA), potentially reducing trade barriers and boosting returns for Indian investors in EU markets

Strategic and Geopolitical Alignment

The visit was seen as a strategic move to counter Turkey-Pakistan alignment, with Cyprus supporting India on issues like Kashmir and cross-border terrorism. This geopolitical alignment strengthens Cyprus as a reliable partner for Indian businesses.

Impact for Indian Investors:

• The stable diplomatic relationship reduces political risk for Indian investments in Cyprus, particularly in sensitive sectors like defense and energy.
• Cyprus’s support for India’s UN Security Council bid and the India-US Civil Nuclear Agreement enhances its role as a trusted partner, encouraging long-term investments by Indian firms

Specific Opportunities for Indian Investors

• Stock Market and Financial Investments: The GIFT City-Cyprus Stock Exchange MoU enables Indian investors to explore dual-listed securities and European market opportunities, potentially increasing portfolio diversification.
• Energy Sector: Cyprus’s natural gas exploration offers Indian energy companies and investors a chance to diversify energy portfolios, aligning with India’s energy security goals.
• Startups and Innovation: India’s skilled talent pool and startup ecosystem, highlighted by Modi, can attract Cypriot investment, creating reciprocal opportunities for Indian venture capitalists to invest in Cyprus’s high-tech and fintech sectors.
• Shipping and Logistics: Cyprus’s shipping industry and India’s focus on maritime development present opportunities for Indian investors in logistics and port-related ventures.

Challenges and Considerations

Trade Volume: Current bilateral trade ($136.96 million in 2023–24) is relatively low, indicating that scaling up will require sustained efforts.

Geopolitical Risks: Tensions in the Eastern Mediterranean, particularly with Turkey, could pose risks to investments in energy and shipping.

Implementation: The success of MoUs depends on effective follow-through, which may require Indian investors to navigate Cyprus’s regulatory and business environment.

Conclusion

Modi’s visit to Cyprus has laid a strong foundation for Indian investors by fostering new investment opportunities, enhancing market access, and strengthening financial and trade linkages. Sectors like fintech, high-tech, renewable energy, and shipping offer significant potential, supported by Cyprus’s strategic position in the IMEC and its EU membership. Indian investors can capitalize on these developments by exploring partnerships, leveraging the DTAA, and participating in dual listings through GIFT City.