The feature you are referring to is known as Composite Builds:

Importing into the IDE

One of the most useful features of composite builds is IDE integration. By applying the idea or eclipse plugin to your build, it is possible to generate a single IDEA or Eclipse project that permits all builds in the composite to be developed together.

In addition to these Gradle plugins, recent versions of IntelliJ IDEA and Eclipse Buildship support direct import of a composite build.

Importing a composite build permits sources from separate Gradle builds to be easily developed together. For every included build, each sub-project is included as an IDEA Module or Eclipse Project. Source dependencies are configured, providing cross-build navigation and refactoring.

The most simple way of achieving this is to use includeBuild in your settings.gradle.

rootProject.name = 'my-composite'

includeBuild 'my-app'
includeBuild 'my-utils'

With that in place, there's no need to configure the build path manually in Eclipse.

Gosh this was a trivial one and it took me way too long to figure it out.

Solved the issue by creating a file named external-projects.properties in the root folder of the parent project with the relative or full path to the dependency project folder.

To be precise, for me the folders tree ends up like this:

git-folder/
|__parent-project/
   |__external-projects.properties
   |__build.gradle.kts
   |__rest (src/main, etc)
|__dependency-project/
   |__build.gradle.kts
   |__rest (src/main, etc)

And the contents of the external-projects.properties file:

dependency-project = ../dependency-project

The dependency project must also be in the build path of the parent project (done by "Right-Click project > Build Path > Configure Build Path" and adding it in the "Projects" tab).

After that, a "Right Click > Gradle > Refresh Gradle Project" did the trick.