New Delhi, Dec 12 (IANS)

India and the UAE Thursday inked a crucial investment promotion and protection agreement that holds the promise of boosting investments "by leaps and bounds" in Indian infrastructure projects.

With the inking of the Bilateral Investment Promotion and Protection Agreement (BIPPA) with the UAE, India now has such agreements with all Gulf Cooperation Council (GCC) countries. This also opens up the possibility of pursuing an India-GCC Free Trade Agreement, which has been on the backburner so far, said official sources.

The BIPPA was inked after a meeting between visiting UAE Foreign Minister Sheikh Zayed Al Nahyan and External Affairs Minister Salman Khurshid here.

The agreement is being viewed as a landmark agreement which would change the future of the UAE's investments coming into India.

While the UAE and India are each others' largest trading partners with the bilateral trade totaling over $75 billion, investments have not kept pace. UAE investments in India have been hovering just over $3 billion mark.

"The BIPPA has been worked on as an exception to the norm of India to freeze all BIPPA agreements until a new template is in place," a source said.

The UAE controls the second largest Sovereign Wealth Fund in the world under the Abu Dhabi Investment Authority at around $600 billion. It has voiced keenness to explore investment in major infrastructure projects in India but was awaiting signature of the BIPPA.

An India-UAE High Level Task Force on Investments which was set up earlier this year to speed up investment opportunities, had met in February 2013 but could not proceed due to the UAE's keenness first to conclude BIPPA.

The signing of the agreement today opens up the possibility of the High Level Task Force meeting again in early January 2014 to explore investment opportunities.

Abu Dhabi National Energy Company (TAQA) is looking at an investment of $700 million in Himachal Pradesh in the electricity sector, while DP World Operations is aiming at expanding their footprint in the port sector in India.

Likewise the possibilities of investments growing by leaps and bounds in Indian infrastructure projects are on the anvil, the source added.