What India-UAE Ties Reveal About a Changing Global Order

The evolving partnership between India and the United Arab Emirates (UAE) has emerged as one of the most dynamic and strategically significant relationships in Asia and the Middle East. Defined by growing economic linkages, enhanced energy collaboration, and increasingly robust strategic alignment, this bilateral relationship is flourishing amid complex regional dynamics and shifting global power structures. While certain operational limitations and bilateral irritants persist, both nations are proactively laying the groundwork for a future-oriented, multidimensional partnership. 

Expanding Bilateral Trade and Economic Connectivity

Economic relations between India and the UAE have blossomed in recent years, due in large part to the Comprehensive Economic Partnership Agreement (CEPA) the two parties signed in 2022. Between 2019 and 2023, Emirati investment in India rose to $16.2 billion, while Indian investment in the UAE climbed to over $7.76 billion. In the 2023–24 fiscal year alone, bilateral trade surged 14.76 percent to $83.64 billion, with Indian exports rising by 27.03 percent and UAE exports increasing by 7.09 percent. Non-oil trade hit $53.4 billion in 2023, outpacing the previous year by $2 billion. More recent data confirms the trade relationship’s positive trajectory, with total trade rising 21.35 percent year-over-year to $80.51 billion during the April–January period of FY25.

CEPA has proven transformative for Indian exporters. For example, exports to the UAE increased by 6.82 percent to $30 billion in the first ten months of the current fiscal year, supported by the issuance of approximately 240,000 certificates of origin, which verify the country where goods are produced— facilitating exports valued at $19.87 billion. The removal or reduction of nearly 80 percent of bilateral tariffs has made goods and services more competitive. In particular, trade in financial services, digital payments, legal and technical consultancy, and e-commerce has grown significantly. Emirati investors are increasingly attracted to India’s vibrant startup ecosystem, while Indian fintech firms expanding their presence in the established financial hubs of Dubai and Abu Dhabi.

Flagship economic initiatives further underscore this convergence. The UAE-India Food Security Corridor aims to strengthen agricultural supply chains and enhance logistics by connecting Indian farms and farmers to Emirati ports. This project addresses critical food security challenges while also contributing to broader regional trade flows. As Indian businesses tap into the Emirates’ strategic location and advanced logistical infrastructure to access markets across the Middle East, Africa, and Europe, the UAE stands to benefit from India’s vast manufacturing base, enormous labor pool, and burgeoning consumer market.

Perhaps the most ambitious element of the bilateral relationship is the India-Middle East-Europe Economic Corridor (IMEC), which seeks to integrate rail, port, and energy infrastructure projects to link Indian production hubs with Middle Eastern and European markets. Seen by some as a strategic alternative to China’s Belt and Road Initiative (BRI), IMEC promises to reduce transit times and costs—potentially cutting shipping timesbetween India and Europe by up to 40 percent and enhancing the global competitiveness of Indian goods.

The Human Bridge: India’s Diaspora in the UAE

An oft-ignored cornerstone of India-UAE relations is the sizable Indian diaspora, estimated at 3.5 million people, living in the Emirates—the largest expatriate group in the country. Skilled and semi-skilled Indian laborers are attracted to the UAE due to the availability of work and high salaries. As a result, remittances play a critical role in the bilateral relationship. In 2023, Indian expatriates in the UAE contributed $21.6 billion to India, 19.2 percent of its total remittance  inflows — making it the second-largest source of remittances globally behind the United States. Beyond providing a critical influx of cash, the Indian diaspora has formed strong social and cultural links to its new home. The construction of the BAPS Swaminarayan temple in Abu Dhabi marked the first traditional Hindu stone temple in the Middle East and exemplifies the UAE’s commitment to religious tolerance and cultural inclusivity. And while the UAE has been widely criticized for poor labor conditions in the past, both Abu Dhabi and New Delhi have increasingly made efforts to safeguard labor welfare, enhance mobility, and provide legal support to Indians living and working in the UAE.

Deepening Energy Cooperation

Energy security lies at the heart of India-UAE relations. Traditionally rooted in the hydrocarbon trade, energy cooperation has diversified as the two economies have developed. The UAE’s Abu Dhabi National Oil Company (ADNOC) is a key partner in India’s strategy to diversify its energy imports. In February, the two sides signed a landmark 14-year agreement for ADNOC Gas to supply up to 1.2 million metric tonnes per year (mtpy) of liquefied natural gas (LNG) to the Indian Oil Corporation, with deliveries scheduled to start in 2026. This deal is a major step toward ensuring that natural gas accounts for 15 percent of India’s primary energy mix by 2030, in accordance with New Delhi’s broader climate objectives. As the world’s third-largest oil consumer and importer, India sources about 51 percent of its crude imports from the Middle East, with the UAE ranking consistently among its top three crude suppliers.

In addition to fossil fuels, civilian nuclear energy cooperation is gaining momentum. A September 2024 memorandum of understanding between India’s Nuclear Power Corporation (NPCIL) and the Emirates Nuclear Energy Corporation (ENEC) outlines a framework for collaboration in operating and maintaining the UAE’s Barakah nuclear power plant—the first of its kind in the Arab world. This agreement not only enhances nuclear safety and operational efficiency; it also marks India’s inaugural foray into the UAE’s civil nuclear sector, deepening strategic trust and technological cooperation between the two nations.

These initiatives must be viewed against the backdrop of global power realignments. The LNG and oil agreements that undergird bilateral energy ties have gained added significance in light of U.S. sanctions on Russia, which compelled India to recalibrate its energy sources. By deepening energy ties with the UAE, India is diversifying its energy portfolio and aligning itself more closely with Washington’s Indo-Pacific strategy. This alignment reinforces the UAE’s role as a key participant in the Abraham Accords and a partner of the United States, as well as India’s position as an important counterbalance to Chinese influence in the region.

India and the UAE are also expanding energy cooperation to include third parties and regional partners. A notable example is the recent tripartite agreement with Sri Lanka to develop the eastern port city of Trincomalee as an energy hub. This initiative not only bolsters Sri Lanka’s energy security but also provides India and the UAE with a strategic foothold in the Indian Ocean, countering Chinese investments like Sinopec’s $3.2-billion refinery deal in Hambantota. The pact with Sri Lanka also proposes interconnection between India’s and Sri Lanka’s electricity grids, a long-discussed project that could enhance energy integration across South Asia. The UAE’s financial strength and expertise with infrastructure integration are critical to this endeavor.

The clean energy landscape is another pivotal arena where Indian and Emirati interests are converging. The UAE’s substantial investments in renewable energy are well-aligned with India’s ambitious target of achieving 50 percent non-fossil fuel capacity by 2030 and reaching net-zero emissions by 2070. The UAE’s Masdar has long sought to carve out a niche in India’s renewable energy space through targeted strategic investments. It first made its mark in 2019 by acquiring a minority stake in Hero Future Energies (HFE)—and has more recently set its sights on Ayana Renewable Power, a clean energy firm backed by India’s National Investment and Infrastructure Fund (NIIF). Last October, ADNOC and the Rajasthan government signed an investment memorandum to explore a massive 60-gigawatt renewable energy project.

Infrastructure and Resilience

Building on their thriving energy partnership, India and the UAE are diversifying collaboration into maritime infrastructure through joint ship-repair clusters at Kochi and Vadinar. Developed by Cochin Shipyard Ltd. (CSL) with the UAE’s Drydocks World, these facilities will modernize India’s maritime ecosystem by offering world-class maintenance for commercial, naval, and offshore vessels. This initiative also addresses a critical gap in India’s ability to repair the largest dry goods cargo vessels.

The Vadinar cluster alone aims to service 32 vessels annually, supported by a floating dry dock, while Kochi’s facility will complement CSL’s existing network. In addition to ship repairs, the partnership will expand into offshore fabrication and marine engineering, aligning with Maritime India Vision 2030 and Atmanirbhar Bharat 2047 goals. Strategically positioned along key shipping routes, the clusters are expected to attract global clients, generate thousands of jobs, and reduce reliance on foreign dry docks.

Alongside commercial infrastructure, India’s Strategic Petroleum Reserves (SPR) facilities, established in 2004, have found a reliable partner in the UAE. ADNOC currently stores 5.86 million barrels of crude at India’s Mangalore SPR site, enhancing India’s ability to manage supply disruptions and reinforces long-term energy security. In a similar vein, the joint venture Urja Bharat, formed by Indian Oil Corporation Ltd. and Bharat Petro Resources Ltd., has signed a production concession agreement with ADNOC for crude extraction from Abu Dhabi’s Onshore Block 1, securing a direct upstream stake for India in the Gulf. These strategic moves, which cement both downstream storage and upstream production, highlight a comprehensive bilateral approach to energy security that extends beyond immediate market needs to address long-term geopolitical uncertainties.

Navigating Challenges and Operational Gaps

Despite significant progress, challenges remain that could hamper future integration between these burgeoning partners. Recent regulatory and financial compliance issues, such as India’s revocation of authorizations for certain UAE-based operators to handle cross-border transactions, illustrate the need for a more harmonized administrative framework. While CEPA has catalyzed trade and investment, barriers persist in customs facilitation, digital trade norms, and a mutual recognition of standards.

Enhancing digital connectivity is also paramount to a lasting, close partnership. The expansion of digital payment platforms, joint fintech initiatives, and stronger data protection and cybersecurity measures are essential to smooth bilateral transactions. Efforts toward aligning regulatory standards in emerging technologies, including artificial intelligence and the Internet of Things (IoT), will be critical as both countries deepen their technological integration. The planned establishment of a UAE-India Internet Corridor, announced earlier this year, is a step toward facilitating smoother data flows and bolstering digital trade. Moreover, strategic alignment on multilateral platforms such as the India-Israel-UAE-U.S. (I2U2) group, BRICS+, and the G20 remains crucial. These organizations will shape future economic and security policies that affect both nations, but they require consistent dialogue and institutional engagement.

Looking Ahead: A Model Strategic Partnership for the 21st Century

The India-UAE partnership is poised to evolve further as innovations in artificial intelligence, critical minerals, and climate technology are expected to drive the next phase of bilateral cooperation. For instance, the agreement between the Abu Dhabi Developmental Holding Company and the Gujarat government to establish a food and agriculture park in Ahmedabad signals a forward-looking move into high-tech agri-industrial collaboration.

At the international level, the India–Middle East-Europe Economic Corridor remains a potential game-changing project, though it has faced delays and setbacks. If IMEC can successfully integrate rail, port, and energy infrastructure, it will enhance connectivity between India and the UAE, increase the competitiveness of Indian goods, and offer a strategic alternative to China’s Belt and Road Initiative.

Healthcare and pharmaceuticals present additional opportunities for synergy. With Indian companies among the largest suppliers of generic medicines to the UAE, there is considerable scope for expanding joint ventures in biotechnology, drug development and production, and medical research.

In recent years, and at an accelerating pace, India-UAE relations have evolved well beyond traditional trade and energy ties into a robust, multifaceted strategic partnership. Despite ongoing challenges from regulatory gaps to digital connectivity issues, deepening bilateral cooperation in energy and trade, as well as strong people-to-people ties, underscore a shared commitment to future growth. As both nations navigate global headwinds, from shifting American trade policies and Chinese assertiveness to the imperatives of climate change, the India–UAE partnership stands as a resilient and adaptive model for other Gulf countries and middle powers to replicate. Continued diplomatic foresight, regulatory alignment, and institutional innovation will be essential to build upon the progress of the past few years. In doing so, India and the UAE are not only charting a course toward mutual prosperity but are also poised to shape the regional and global order of the 21st century.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.