India and United Arab Emirates

The United Arab Emirates has become, arguably, India’s most dynamic partnership in West Asia — and a template for what modern Gulf diplomacy can achieve. What was once a simple buyer-seller relationship built on oil and migrant labour has, within a decade, matured into a Comprehensive Strategic Partnership spanning trade, investment, defence, technology, energy, finance and culture.

Anchored by a 4.3-million-strong Indian community, a landmark free-trade agreement, and a US$100-billion trade relationship, the UAE is today India’s gateway to West Asia, Africa and Europe and a co-architect of its multi-aligned grand strategy.

Historical Background

Though the UAE was formed as a federation only in 1971, India’s links with the region are far older, rooted in centuries of maritime trade across the Arabian Sea. The modern relationship rests on three enduring connectors: trade, investment and manpower.

Ties have been sustained by frequent high-level exchanges, yet for a long stretch the relationship was under-invested: after Indira Gandhi’s 1981 visit, there was a 34-year gap before the next prime-ministerial visit.

Post-Cold-War India had tilted its strategic energies towards East/Southeast Asia and the US, and treated the Gulf largely as an oil supplier rather than a strategic partner — an outlook that only shifted after 9/11 and the recognition of West Asia’s strategic weight.

The turning point came in 2015, when the Prime Minister’s visit broke the long hiatus and elevated ties to a Comprehensive Strategic Partnership. Momentum accelerated when Crown Prince Sheikh Mohamed bin Zayed was Chief Guest at India’s Republic Day in 2017, and a formal strategic-partnership agreement followed. Since then the relationship has grown at extraordinary speed.

Timeline at a Glance

Why the UAE Matters — Key Drivers

Driver	Significance for India
Trade	The UAE is among India’s top three trading partners; bilateral trade has crossed US$100 billion, with a target of US$200 billion by 2032.
Investment & capital	A major FDI source and a vast reservoir of sovereign capital for Indian infrastructure, energy and technology.
Energy	A key source of crude, LNG and LPG, and a partner in strategic petroleum storage and the green-energy transition.
Diaspora & remittances	Home to ~4.3 million Indians — India’s largest overseas community — and the second-largest source of remittances.
Gateway	A logistics and re-export hub that opens African, West Asian and European markets to Indian firms.
Strategic / minilateral	A core partner in I2U2 (the “West Asian Quad”) and the IMEC corridor — pillars of India’s West Asia strategy.

Areas of Cooperation

Trade and Economy

The India–UAE CEPA (Comprehensive Economic Partnership Agreement), signed in 2022, was India’s first new-generation Gulf trade pact and a game-changer. Bilateral trade crossed US$100 billion in FY 2024–25 — making the UAE one of India’s largest partners — with non-oil trade now nearly two-thirds of the total, and the two sides targeting US$200 billion by 2032.

A Bilateral Investment Treaty (2024) strengthened investor protection. India exports gems and jewellery, engineering goods, electronics, food items and textiles, and imports crude oil, petroleum products, gold and chemicals.

Investment and Financial Integration

• Sovereign capital: The UAE has committed large-scale investment in Indian infrastructure, energy and logistics, building on an earlier pledge of up to US$75 billion for infrastructure.
• Financial linkages: A Local Currency Settlement System (INR–Dirham) reduces dollar dependence, and India’s UPI has been linked with the UAE’s instant-payment platform AANI, while the UAE’s domestic card JAYWAN is built on India’s RuPay stack.
• Institutional presence: UAE banks are expanding into India (including at GIFT City), and the Bharat Mart hub in Dubai is being developed to route Indian MSME goods into Africa and Eurasia.

Energy

The UAE is a major source of crude oil, LNG and LPG for India and a partner in strategic petroleum reserves — Abu Dhabi’s ADNOC stores crude in India’s underground facilities.

Cooperation is now expanding into the green-energy transition, including solar and green hydrogen, as both economies pivot beyond hydrocarbons.

Defence and Security

• Foundational pact: A defence cooperation agreement (2003) laid the base; today the two hold regular joint exercises — Desert Cyclone (Army) and Gulf Star (Navy) — securing the volatile Persian Gulf.
• Counter-terrorism: A landmark came in 2015, when the joint statement — for the first time — condemned state-sponsored terrorism (a veiled reference to Pakistan) and called for dismantling terror infrastructure, a major diplomatic win for India.
• Evacuation hub: India has developed the UAE as a focal point for humanitarian evacuation of Indian expatriates from crisis zones across West Asia.
• Deepening architecture: There is a push to institutionalise a 2+2 (Foreign & Defence Ministers) dialogue and to move towards joint defence co-production.

Diaspora and Culture

The ~4.3-million-strong Indian community — the UAE’s largest expatriate group — is the human bedrock of the relationship. Welfare mechanisms such as the Indian Community Welfare Fund and the MADAD portal address grievances.

In a landmark of cultural harmony, the BAPS Hindu Mandir in Abu Dhabi — the first traditional Hindu stone temple in the Middle East — was inaugurated in February 2024, on land granted by the UAE.

Educational ties are deepening through offshore campuses such as IIT Delhi–Abu Dhabi, reflecting the UAE’s ethos of tolerance and coexistence.

Strategic Minilaterals

The UAE is central to India’s new minilateral diplomacy: I2U2 (India–Israel–UAE–US, the “West Asian Quad”) drives cooperation in food, water, energy and technology, while the India–Middle East–Europe Economic Corridor (IMEC) positions the UAE as the first node linking India to Europe. Both are also partners in the expanded BRICS.

Recent Milestones — Quick Recall 2015: PM visit after 34 years; ties elevated to Comprehensive Strategic Partnership. 2017: Sheikh Mohamed bin Zayed is Republic Day Chief Guest; strategic-partnership agreement. 2022: India–UAE CEPA — India’s first new-generation Gulf FTA. Feb 2024: BAPS Hindu Mandir inaugurated; Bilateral Investment Treaty; UPI–AANI & RuPay–JAYWAN linkages. FY 2024–25: Bilateral trade crosses US$100 billion; new target of US$200 billion by 2032.

Issues and Challenges

• Trade deficit: Despite CEPA, India runs a large trade deficit (around US$27 billion), driven by high-value energy imports.
• Non-tariff barriers: Strict sanitary/phytosanitary rules and Halal-certification requirements restrict Indian poultry, meat and processed-food exports.
• The China factor: Beijing’s cheque-book diplomacy and infrastructure financing often crowd out Indian telecom and logistics firms in the Gulf.
• Pakistan lifeline: The UAE’s periodic financial bailouts of Pakistan remain an indirect concern for India regarding cross-border terror financing.
• Regional volatility: Instability involving Israel, Iran and the Red Sea threatens mega-projects like IMEC and exposes the 4.3-million diaspora to risk.
• Labour welfare: Despite reforms, the Kafala sponsorship system continues to raise welfare concerns for Indian blue-collar workers.

Way Forward

• Institutionalise a 2+2 dialogue: Establish a formal Foreign & Defence Ministers’ mechanism — mirroring India’s ties with the US and Russia — to navigate West Asia’s security architecture.
• Dismantle NTBs: Use CEPA review mechanisms to push transparency on labelling and SPS rules and force open market access.
• Leverage sovereign capital: Pair the UAE’s capital surplus with India’s manufacturing scale in clean energy, FinTech and healthcare to correct the trade imbalance.
• Advance labour mobility: Push beyond Kafala toward standardised, rights-aligned labour-mobility agreements.
• Deepen tech & green ties: Scale up cooperation in green hydrogen, AI, space and digital public infrastructure.

Conclusion

The India–UAE story is a model of how a relationship can be transformed within a single decade — from a transactional oil-and-labour link into a multi-dimensional strategic partnership. The CEPA, the US$100-billion trade milestone, the BAPS Mandir, payment-system integration and minilaterals like I2U2 and IMEC together make the UAE India’s gateway to West Asia and its most reliable Gulf partner.

The challenges — the trade deficit, the China factor, the Pakistan lifeline and labour welfare — are real, but manageable through institutionalised dialogue and joint investment. If sustained, this partnership will remain the geopolitical anchor of India’s engagement across the wider West Asian and Indo-Abrahamic space.