India-UAE Relations – Explained Pointwise

The President of the United Arab Emirates (UAE) has recently visited New Delhi. Both the countries have agreed upon a range of bilateral agreements & outcomes – from defense to space & LNG. This visit holds significant importance particularly against the backdrop of growing military tension in the Gulf region.

Table of Content

Agreements signed during the 2026 visit Evolution of India-UAE Relations Significance of India-UAE Relations Challenges in India-UAE Relations

Agreements signed during the 2026 visit:

1. Strategic Defense Partnership: Signed a Letter of Intent (LoI) to establish a formal framework for defense industrial collaboration, cybersecurity, and joint technology development.
2. Space Ecosystem: An LoI between IN-SPACe (India) and the UAE Space Agency was signed to develop joint infrastructure, including launch complexes, satellite fabrication facilities, and joint space missions.
3. 10-Year LNG Deal: A $3 billion agreement was signed between HPCL and ADNOC Gas. The UAE will supply 0.5 million tonnes of LNG per annum to India for 10 years, starting in 2028.
4. Civil Nuclear Push: Following India’s new SHANTI Law (2025), both nations agreed to explore partnerships in advanced nuclear technologies, specifically focusing on Small Modular Reactors (SMRs) and large nuclear reactors.
5. Digital Embassies: Both sides agreed to explore the establishment of “Digital/Data Embassies” to store sovereign data across borders under mutually recognized sovereignty arrangements.
6. Supercomputing Cluster: An agreement between C-DAC (India) and G42 (UAE) was reached to set up a supercomputing cluster in India as part of the AI India Mission.
7. Agri-Export Boost: An MoU was signed between APEDA (India) and the UAE Ministry of Climate Change to streamline food safety and technical standards, facilitating easier export of Indian rice and produce.
8. House of India: Announced the establishment of a permanent cultural space called the ‘House of India’ in Abu Dhabi to showcase Indian art and heritage.

Evolution of India-UAE Relations:

Historical & Maritime Foundations (Pre-1971)	The bond predates the formation of the UAE. For centuries, the Malabar coast and the Arabian Peninsula were linked by maritime trade. Indian seafarers exchanged spices, textiles, and precious stones for dates and pearls. Until 1966, the Gulf Rupee (issued by the Reserve Bank of India) was the official currency in the region, illustrating the deep economic integration.
Diplomatic Birth & The “Oil-Labor” Era (1971–2014)	Following the unification of the UAE in 1971, formal diplomatic ties were established in 1972. The relationship was primarily defined by two factors: India’s need for crude oil and the UAE’s need for labor to build its infrastructure. This era saw a massive influx of Indian blue-collar workers.
The Strategic Leap (2015–Present)	The visit of PM Narendra Modi in 2015 marked a “renaissance” in bilateral ties. Comprehensive Strategic Partnership (2017): The relationship was formally elevated during MBZ’s visit as the Chief Guest for India’s Republic Day.  The signing of the Comprehensive Economic Partnership Agreement (CEPA) in 2022 transformed the economic landscape.

Significance of India-UAE Relations:

Geopolitical Significance	Bridge to the Arab World: The UAE, under its visionary leadership, is a pivotal state in the Gulf Cooperation Council (GCC) and the wider Islamic world. Strong ties with the UAE enhance India’s standing and diplomacy across the Middle East. Balancing Act in a Multipolar Region: Both nations share a preference for strategic autonomy. The partnership helps balance other regional powers and provides India a stable, influential partner amid complex regional dynamics (e.g., Iran-Saudi tensions). Counter-Balancing: The partnership provides India with a stable anchor in West Asia, especially as a counterweight to shifting dynamics like the 2025 Saudi-Pakistan defense pact. Multilateral Forums: The UAE is a key partner for India in mini-laterals like the I2U2 Group (India-Israel-UAE-USA) and within BRICS and the UN. This amplifies India’s voice on global issues.
Economic & Trade Significance	Trade Powerhouse: The UAE is India’s 3rd largest trading partner (after US and China) and 2nd largest export destination. Bilateral trade reached $100 billion in FY 2024–25, aided by the landmark Comprehensive Economic Partnership Agreement (CEPA) signed in 2022. Investments: UAE sovereign wealth funds are major investors in India across infrastructure, renewable energy, technology, and logistics. The UAE committed to a $75 billion investment in India’s infrastructure, signaling a move from being just a trade partner to a long-term stakeholder.  Gateway to West Asia & Africa: The UAE’s world-class logistics hubs (like Jebel Ali Port) serve as a critical trade and connectivity corridor for Indian goods to the Middle East, Africa, and Europe.
Energy Security	The UAE is a stable and reliable energy supplier for India, meeting a significant portion of its crude oil and LNG needs. Growing collaboration in renewable energy, with UAE investing in India’s massive solar energy sector.
Diaspora & Remittances	The 3.5 million-strong Indian community in the UAE (~35% of its population) is the largest expatriate group and the backbone of the UAE’s workforce, contributing significantly to its economy and society. The UAE is the largest single-source of remittances to India (over $15-18 billion annually), vital for India’s foreign exchange reserves and household incomes in states like Kerala, Tamil Nadu, and Uttar Pradesh. The community acts as a living bridge, fostering deep people-to-people ties and cultural understanding.
Strategic & Security Cooperation	Counter-Terrorism & Intelligence: Close cooperation on counter-terrorism, deradicalization, and intelligence sharing is crucial for regional stability and for addressing mutual security threats. Defense Ties: Regular joint military exercises (air force ‘Desert Eagle’, naval exercises), port calls, and defense dialogues. The UAE is a key security partner in the volatile Gulf region. Maritime Security: Collaboration to secure vital sea lanes in the Western Indian Ocean and the Gulf, which are lifelines for India’s energy and trade flows.
Cultural & Soft Power	The inauguration of the BAPS Hindu Mandir in Abu Dhabi is a historic symbol of religious tolerance and deep cultural respect, significantly boosting India’s soft power.

Challenges in India-UAE Relations:

1. Economic & Trade Frictions:
   • Non-Tariff Barriers (NTBs): Despite the CEPA, issues like stringent product standards, certification hurdles, and customs procedures can act as de facto barriers for Indian exporters.
   • Trade Imbalance: While trade volume is huge, the balance often tilts toward the UAE (due to oil & gold imports). Increasing Indian exports to correct this is a work in progress.
   • Oil Dependency: While the relationship is diversifying into renewables and nuclear (under the SHANTI Law), the bulk of trade is still anchored in hydrocarbons. This makes both economies vulnerable to global oil price shocks and the accelerating global shift toward green energy.
2. Geopolitical Tightrope:
   • Balancing Relations with Pakistan: The UAE maintains close ties with Pakistan. While the UAE has clearly prioritized its relationship with India, it expects India to manage tensions with Pakistan responsibly, as instability affects the entire region.
   • Engagement with Iran: India maintains significant economic and strategic interests in Iran (Chabahar Port, energy). The UAE, while now engaging diplomatically with Iran, remains historically suspicious. India’s balancing act requires nuanced diplomacy.
   • The “New Middle East” Dynamics: The UAE’s normalization of ties with Israel (Abraham Accords) and its deepening ties with China (a strategic competitor for India) add layers of complexity.
3. Diaspora-related Issues:
   • Visa and Labor Reforms: The UAE’s evolving labor laws (like the “Emiratization” policy) and visa regulations, while progressive, can create uncertainty for the large Indian workforce, especially blue-collar workers.
   • Rights and Welfare: Ensuring fair working conditions, timely wages, and legal protection for Indian workers remains a constant diplomatic priority, especially for low-skilled laborers vulnerable to exploitation.

UPSC GS-2: International Relations Read More: The Indian Express