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India and the United Arab Emirates share a long-standing relationship shaped by trade, cultural exchanges, and strong community connections across the Arabian Sea. Trade in pearls, dates, spices, textiles, and fisheries connected western India with the Gulf region for centuries. Recently, PM Narendra Modi had a brief stopover in Abu Dhabi, days after UAE came under Iranian missile & drone attacks. Criticizing the attack on the Emirates, PM Modi said that India stands shoulder to shoulder with the UAE.
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 Launch & The “Oil-Labor” Era (1971–2014)
India was among the first countries to recognize the UAE federation in 1971, establishing formal diplomatic relations in 1972.
The discovery of oil in the UAE drastically altered the trade dynamic.The UAE became a vital anchor for India’s energy security, while India provided the vast blue-collar workforce required to build the UAE’s modern infrastructure. This era saw a massive influx of Indian blue-collar workers.
By the early 1990s, as India opened up its economy through liberalization and Dubai positioned itself as a global logistics and re-export hub, bilateral trade began expanding beyond traditional commodities.
The Strategic Leap (2015–Present)
The visit of PM Narendra Modi in 2015 (first by an Indian PM in over three decades) 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.
What are the various initiatives to boost India-UAE relations?
Energy Security
Strategic Petroleum Reserves (SPR) Expansion: The Abu Dhabi National Oil Company (ADNOC) and Indian Strategic Petroleum Reserves Limited (ISPRL) have entered into structural pacts to store millions of barrels of Emirati crude in India’s underground strategic reserves. This guarantees India emergency access to oil during geopolitical supply chain chokepoints.
Long-Term LPG & LNG Sourcing: Moving away from volatile spot-market purchases, Indian Oil Corporation (IOC) and ADNOC finalized robust, long-term supply agreements for Liquefied Petroleum Gas (LPG) and Liquefied Natural Gas (LNG) to ensure structural price stability for Indian consumers.
Economic
CEPA (Comprehensive Economic Partnership Agreement): Implemented to eliminate or drastically reduce tariffs on over 90% of products, this agreement successfully pushed bilateral merchandise trade past $100 billion for the first time in the 2025–2026 fiscal year.Bolstered by this success, both nations have officially committed to an ambitious target of $200 billion in bilateral trade by 2032.
Local Currency Settlement System (LCSS): This operationalized mechanism allows Indian and Emirati businesses to bypass the US dollar entirely, settling trade invoices directly in Indian Rupees and UAE Dirhams.
Digital Payment Linking (UPI & JANI/Jaywan): India’s Unified Payments Interface (UPI) has been interconnected with the UAE’s instant payment platform. This integration allows seamless cross-border fund transfers and card swiping for travelers, dramatically reducing transaction costs for the massive Indian diaspora.
Security
Joint Military Exercises:
Desert Cyclone (Army): This is the flagship joint military exercise between the Indian Army and the UAE Land Forces. It focuses explicitly on urban warfare, counter-insurgency, and desert combat operations.
Zayed Talwar (Navy): A bilateral naval exercise designed to enhance interoperability between the Indian Navy and the UAE Navy. It focuses on maritime search and rescue, anti-piracy operations, air defense tracking, and securing vital Sea Lines of Communication (SLOCs) in the Persian Gulf and Arabian Sea.
Desert Eagle (Air Force): Periodic tactical fighter exercises where the Indian Air Force (IAF) and the UAE Air Force engage in simulated, high-intensity aerial combat maneuvers.
Zero Tolerance on Extremism: Both nations have created a joint working group on counter-terrorism. This has led to highly effective intelligence sharing regarding online radicalization, the movement of transnational terrorists, and the tracking of extremist recruitment networks across the Middle East and South Asia.
Technological
8-Exaflop Supercomputing Cluster: A breakthrough technological initiative signed between India’s C-DAC and the UAE’s AI giant, G42, to co-develop an ultra-high-speed, sovereign supercomputing cluster to advance AI research, climate modeling, and data analytics.
Integrated Space Ecosystem: Moving beyond simple satellite launches, both nations have agreed on an initiative aimed at full-scale commercialization of the space sector. This includes building end-to-end infrastructure, launching joint space missions, and fostering cross-border aerospace startups.
Project SHANTI (Civil Nuclear Cooperation): Enabled by India’s legislative advancements in advanced energy, both nations have established a roadmap to collaborate on advanced reactor systems, small modular reactors (SMRs), and mutual maintenance workflows for nuclear power plants.
Misc
I2U2 Food Security Corridor: Funded by UAE, this initiative integrates Israeli water-saving technology with Indian agricultural land. High-tech Food Parks are being built across India to process and package crops directly for dedicated, cold-chain export corridors to the UAE, creating guaranteed demand for Indian farmers and food security for the Gulf.
Global Off-shore Campuses: Elevating cultural and academic soft power, elite Indian institutions have physically expanded into the UAE, highlighted by operational offshore campuses of the Indian Institute of Technology (IIT) Delhi in Abu Dhabi and the Indian Institute of Management (IIM) Ahmedabad in Dubai.
What is the 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
Energy Supplier: The UAE is a stable and reliable energy supplier for India, meeting a significant portion of its crude oil and LNG needs. Last year, UAE was 4th largest source of crude oil, meeting nearly 11% of the requirement. UAE is the largest source of LPG, catering to ~40% of the requirement.
Strategic Petroleum Reserves (SPR): The Abu Dhabi National Oil Company (ADNOC) was the first foreign mega-corporation to invest in India’s underground strategic oil reserves (such as the Mangaluru facility).
Renewable Energy: 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 diaspora has transitioned from predominantly blue-collar labor to high-earning white-collar professionals, tech entrepreneurs, and academics.
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.
What are the Challenges in India-UAE Relations?
Economic & Trade Frictions:
Trade Imbalance: While trade volume is huge, the balance often tilts toward the UAE (due to oil & gold imports). India’s exports to the UAE are heavily dominated by traditional sectors like gems, jewelry, textiles, and refined petroleum. Expanding India’s share in high-value manufacturing, engineering goods, and technology services remains slow due to non-tariff barriers.
Non-Tariff Barriers (NTBs): Indian exporters, particularly in the agricultural and pharmaceutical sectors, frequently encounter strict sanitary and phytosanitary (SPS) measures. Despite the CEPA, issues like stringent product standards, certification hurdles, and customs procedures can act as de facto barriers for Indian exporters.
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.
Geopolitical Tightrope:
UAE-Pakistan Relations: The UAE has historically close ties with Pakistan, including military cooperation and hosting of Pakistani diaspora. While the relationship with India has grown, the UAE continues to engage with Pakistan, which can be a source of sensitivity, especially during India-Pakistan crises (e.g. post-Pulwama or Operation Sindoor).
Iran-UAE Tightrope: Following intense geopolitical flare-ups in the region – such as the recent missile and drone strikes targeting the UAE – India has had to walk a narrow diplomatic tightrope. Indian Prime Minister explicitly condemned the strikes, standing “shoulder-to-shoulder” with Abu Dhabi. However, India must simultaneously manage its vital strategic relationship with Tehran, particularly regarding the operation of the Chabahar Port and transit access to Central Asia.
China’s Growing Role in the UAE: China is the UAE’s largest trading partner. The UAE is a key node in China’s Belt & Road Initiative (BRI). Chinese ports, tech companies (Huawei, 5G), and military cooperation in the UAE create strategic competition for India, which sees the UAE as a partner for the India-Middle East-Europe Corridor (IMEC).
Vulnerability of Maritime Chokepoints: The modern maritime crisis underscores a shared vulnerability. A major portion of India’s energy imports passes directly through the Strait of Hormuz. Any blockade or escalation by regional actors directly threatens India’s domestic energy security and food corridor logistics with the UAE.
Diaspora-related Issues:
Economic Vulnerability of Blue-Collar Workers: Despite a massive shift toward high-skilled white-collar professionals, a significant portion of the diaspora remains in low-wage construction and domestic sectors. Issues related to harsh working conditions, delayed wage payments, and the strict Kafala (sponsorship) system require constant diplomatic intervention.
Visa and Labor Reforms: The UAE’s evolving labor laws (like the “Emiratization” Policy [increase the national workforce in the private sector]) and visa regulations, while progressive, can create uncertainty for the large Indian workforce, especially blue-collar workers.
What should be the Way Forward?
Deepen the Economic Integration: The current CEPA is a foundation, not the ceiling. The focus must shift to value-added sectors and financial integration. Move beyond raw materials (oil, gems) and low-skill exports. Target co-production in:
Pharmaceuticals & Medical Devices: Create a joint regulatory fast-track for Indian generics and medical devices to access UAE ports for re-export to Africa and the Middle East.
Aerospace & Defense: Move from joint exercises to joint manufacturing (e.g., co-developing UAVs, cybersecurity hardware, or maintenance hubs for Indian military platforms in UAE).
Semiconductors & Electronics: Leverage UAE sovereign wealth and Indian talent to build chip design or assembly units under India’s semiconductor mission.
Manage Geopolitical Frictions Maturely:
On China: Instead of demanding the UAE to choose sides, offer a superior “India-UAE model” (democracy + market + technology) versus the “China-UAE model” (autocracy + credit + infrastructure). Let the UAE benefit from both while tilting towards India on strategic issues (like IMEC).
On Pakistan: Institutionalize a “no-surprises” protocol. The UAE should inform India in advance of any high-level military or political engagement with Pakistan, and India should similarly share its concerns. This builds trust without requiring the UAE to break ties.
On Iran: Maintain a “separation of tracks.” Both nations can cooperate on maritime security with the US while continuing trade with Iran. A joint India-UAE working group on sanctions compliance will help navigate US secondary sanctions.
Institutionalize a 2+2 Ministerial Dialogue: Like India has with the US and Australia, a regular dialogue between the Indian External Affairs & Defence Ministers and their UAE counterparts (Foreign & Defence) to coordinate on maritime, air, and cyber security.
Operationalizing IMEEC and MAITRI: Both nations must expedite the technical and customs integration of the India-Middle East-Europe Economic Corridor (IMEEC) and Project MAITRI. This includes harmonizing digital custom clearances and container-tracking systems to ensure that goods move seamlessly from Indian ports to Jebel Ali, and onward via rail.
Scaling the Local Currency Settlement System (LCSS): While the framework to trade in Indian Rupees and UAE Dirhams exists, its adoption must be scaled beyond major oil and gold conglomerates. Incentivizing small and medium enterprises (MSMEs) to use the LCSS will drastically reduce dollar-dependence and transaction costs.
Joint Skill-Mapping and Certification: As the UAE pushes its “Emiratization” policy and transitions toward a high-tech economy, India’s National Skill Development Corporation (NSDC) should partner with UAE authorities to align Indian vocational training with modern Emirati job requirements. This will ensure that Indian workers transition from low-wage manual labor to high-value technical and service roles.
Digital Upgradation of Worker Portals: Integrating India’s e-Migrate system directly with the UAE’s Ministry of Human Resources and Emiratisation (MoHRE) digital platform will eliminate predatory middle-men, automate contract verification, and guarantee transparent wage payouts, effectively insulating vulnerable blue-collar workers.
Post-Mains Strategy Session by Mr. Ayush Sinha | ForumIAS
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