Source: The post “The UAE-India corridor is sparking a growth story” has been created, based on “The UAE-India corridor is sparking a growth story” published in “The Hindu” on 16th February 2026.
UPSC Syllabus: GS Paper-2- International Relations
Context: The economic partnership between India and United Arab Emirates has transformed into a dynamic growth corridor that integrates trade, investment, technology, and people-to-people ties. The signing of the Comprehensive Economic Partnership Agreement in 2022 accelerated bilateral trade, allowing the countries to reach the $100-billion trade target five years earlier than planned. This corridor now represents a model of how strategic alignment of policy, capital, and execution can drive mutual economic growth.
Scale and Depth of the Economic Corridor
- Trade Expansion
- Bilateral trade between India and the UAE crossed $100 billion rapidly and has now been targeted to reach $200 billion by 2032, reflecting strong economic momentum.
- Non-oil trade reached about $65 billion and grew nearly 20 percent, indicating that the partnership has diversified beyond traditional hydrocarbon trade.
- The expansion of trade in sectors such as gems and jewellery, electronics, food processing, and services demonstrates deeper integration of supply chains.
- Investment Flows
- UAE entities have invested more than $22 billion in India across infrastructure, logistics, healthcare, and technology sectors.
- Indian companies have invested over $16 billion in the UAE in manufacturing, construction, renewable energy, and services industries.
- Companies like Reliance Industries, Ashok Leyland, and Larsen & Toubro are executing major industrial projects in the UAE, showing long-term commitment.
- UAE companies such as DP World, Emirates NBD, and ADNOC are investing heavily in Indian infrastructure, banking, and energy sectors.
III. Human and Connectivity Links
- Nearly five million Indians live in the UAE and form its largest expatriate community, strengthening cultural and economic relations.
- More than 1,200 weekly flights between the two countries facilitate tourism, trade, and professional exchanges.
- These people-to-people ties create trust and business networks that sustain long-term cooperation.
Key Drivers Behind the Corridor’s Success
- Policy Architecture
- CEPA removed tariffs on about 90 percent of goods, reducing trade barriers and encouraging business expansion.
- The Bilateral Investment Treaty of 2024 strengthened investor confidence through dispute-resolution mechanisms and protection guarantees.
- Strategic defence and security cooperation increased political trust and stability, which are essential for long-term investments.
- Sectoral Diversification
- The corridor has moved beyond oil trade into advanced manufacturing, renewable energy, financial services, logistics, and healthcare sectors.
- Joint projects in solar energy, electric mobility, low-carbon chemicals, and fintech demonstrate a shift towards sustainable and innovation-driven growth.
- Indian banks, IT firms, and healthcare providers are building operational presence in the UAE, strengthening service sector integration.
Emerging Areas of Cooperation
- Artificial Intelligence and Digital Economy
- India hosting the AI Impact Summit reflects its rising role in shaping global AI governance and innovation.
- The UAE, which invested early in AI infrastructure and policy frameworks, is collaborating with India on data centres, cloud computing, and AI-driven industrial applications.
- Cooperation in AI can improve productivity in sectors like logistics, healthcare, energy management, and urban planning.
2. Third-Country Market Expansion
- The Bharat Mart project in the UAE will act as a global distribution hub for Indian goods to Africa, West Asia, and Eurasia.
- India and the UAE are exploring joint digital infrastructure and capacity-building projects in Africa, which can enhance their geopolitical influence.
- Such initiatives convert a bilateral partnership into a global economic platform.
Significance for India
- The corridor boosts India’s exports, supports manufacturing growth, and increases foreign direct investment inflows.
- The UAE acts as a gateway for Indian firms to access European, African, and Middle Eastern markets, aiding global expansion.
- Long-term LNG supply agreements improve India’s energy security and reduce supply disruptions.
- Collaboration in AI and advanced technology strengthens India’s digital economy and innovation ecosystem.
- Employment opportunities in the UAE support remittances and improve livelihoods for Indian workers.
Challenges and Concerns
- Political instability in West Asia could disrupt trade routes and investments.
- Differences in regulatory systems, taxation, and labour laws may create operational challenges for companies.
- Overdependence on expatriate labour markets can create social and economic vulnerabilities.
- Trade imbalances may occur if diversification is not sustained and domestic industries are not strengthened.
Way Forward
- Both countries should expand CEPA into services, digital trade, and startup ecosystems.
- They should establish joint AI research centres and innovation funds.
- They should enhance logistics connectivity through ports, shipping corridors, and multimodal transport.
- They should promote sustainable practices in energy, labour standards, and climate cooperation.
Conclusion: The India–UAE corridor demonstrates how strategic policy alignment, strong diaspora links, and sustained investments can transform bilateral relations into a global growth engine. As both economies integrate further into technology, infrastructure, and third-country markets, this corridor can become a model for South-South economic cooperation and global value chain integration.
Question: The India–UAE economic corridor has evolved from an energy-based relationship into a comprehensive strategic partnership. Discuss the key drivers, opportunities, and challenges in the growing ties between India and United Arab Emirates.
Source: The Hindu
