India – UAE relations

02 Jul, 2026 Samyak IAS

India–UAE relations have evolved from traditional trade and diaspora linkages into a comprehensive strategic partnership. Since the Indian Prime Minister’s 2015 visit, the relationship has gained new momentum across trade, investment, energy, defence, technology and connectivity.

Today, the UAE is not only one of India’s key economic partners but also a major pillar of India’s West Asia policy. With CEPA, I2U2, energy cooperation, defence engagement and a strong Indian diaspora, India–UAE ties have become multi-dimensional and future-oriented.

Evolution of India–UAE Relations

Stage	Nature of Relations	Key Features
1. Civilisational and Maritime Linkages Pre-1971	Informal but deep-rooted commercial and cultural ties	India and the Gulf were connected through the Arabian Sea trade network. Indian merchants played an important role in Gulf society through the historic dhow trade, which linked South Asia, Arabia and East Africa for centuries. The Indian Rupee also functioned as a major currency in the Trucial States until 1966.
2. Oil, Labour and Limited Strategic Trust 1971–2000	Transactional relationship after the formation of the UAE	Relations were mainly shaped by UAE oil exports and Indian migrant labour. During the Cold War, geopolitical differences created distance, as the UAE was closer to the US–Saudi bloc while India had close ties with the USSR. The UAE also viewed India largely through the Pakistan lens.
3. Trade Expansion with Low Political Engagement 2000–2014	Strong economic ties but limited strategic depth	Bilateral trade grew rapidly, but high-level political engagement remained weak. Energy relations continued largely as a buyer–seller arrangement, without deeper cooperation in reserves, refining or downstream investments. However, the 2002 deportation of Aftab Ansari indicated the beginning of quiet security cooperation.
4. Strategic Realignment and Comprehensive Partnership 2015–Present	Shift from transactional ties to strategic partnership	The Prime Minister’s 2015 visit to the UAE ended a long gap in high-level engagement and gave new momentum to relations. The UAE gradually de-hyphenated India from Pakistan, visible in India’s invitation as Guest of Honour at the OIC in 2019 despite Pakistan’s opposition. Cooperation expanded through CEPA 2022, I2U2, IMEC, investment, technology, defence and connectivity.
5. Emerging Defence and Future-Oriented Partnership 2026 onwards	Towards deeper security and defence cooperation	In January 2026, India and the UAE signed a Letter of Intent for a formal Strategic Defence Partnership. This reflects growing trust in security, defence industry cooperation and regional strategic alignment.

Current Areas of Development in India–UAE Relations

Economic partnership: CEPA has shifted ties from commodity trade to deeper economic integration, with both sides targeting $200 billion annual trade by 2032. Initiatives like Bharat Mart and Bharat-Africa Setu aim to link Indian MSMEs with the UAE’s re-export network.
Defence cooperation: India and the UAE are moving towards a stronger security partnership through the Strategic Defence Partnership LoI and advanced joint exercises such as Desert Cyclone and Desert Flag.
From crude trade to clean energy partnership: Energy ties are shifting from transactional crude trade to LNG, green hydrogen, civil nuclear cooperation and Small Modular Reactors under the SHANTI framework. The HPCL–ADNOC 10-year LNG pact and cooperation on SMRs show growing long-term energy alignment.
Fintech and digital connectivity: Integration of RuPay with UAE’s JAYWAN card system, digital payment links, and proposed supercomputing collaboration between C-DAC and G42 are deepening digital ties.
Infrastructure cooperation: UAE investments are shifting from passive portfolio holdings to active greenfield asset creation. UAE support for Dholera Special Investment Region, a new international airport, a greenfield port and DP World’s additional $5 billion logistics investment aim to connect Indian manufacturing zones with the Jebel Ali transshipment hub and strengthen the IMEC corridor.
Space cooperation: India and the UAE are moving from launch services to joint development, with IN-SPACe and the UAE Space Agency working on commercial launch facilities.
Knowledge and skill mobility: IIT Delhi-Abu Dhabi, mutual recognition of qualifications and professional mobility are shifting the relationship from labour migration to a high-end knowledge partnership.
Cultural and sports diplomacy: India–UAE ties are also becoming a civilisational partnership. The BAPS Hindu Mandir, inaugurated in February 2024 on land gifted by the UAE President, reflects cultural recognition of the Indian diaspora.

Key Frictions in India–UAE Relations

Trade and CEPA concerns: Despite CEPA, India faces a high trade deficit due to energy imports, limited export diversification, and concerns over third-party goods entering through the UAE.
IMEC and geopolitical risks: West Asian instability, especially the Israel–Gaza conflict, has slowed IMEC’s progress and exposed India’s connectivity strategy to regional volatility.
Energy dilemma: India depends on UAE oil and LNG for short-term energy security, while both countries also pursue green hydrogen and clean energy goals.
Currency settlement hurdles: Rupee-dirham trade settlement faces limits because UAE exporters have few large-scale options to reinvest accumulated rupees in India.
Diaspora and Emiratisation: UAE’s nationalisation policy may reduce white-collar opportunities for Indian workers and affect remittance flows.
Investment delays: UAE investment pledges face slow execution due to tax concerns, dispute resolution issues and project-level hurdles.
Defence divergence: India favours active maritime security operations, while the UAE prefers cautious diplomacy, limiting deeper military integration.
China factor: UAE’s growing ties with China in technology, ports and defence create strategic concerns for India.

Measures to Strengthen India–UAE Relations

Fast-track investment dispute resolution: India can create a dedicated arbitration mechanism in GIFT City for UAE sovereign funds such as ADIA and Mubadala to reduce delays and speed up greenfield infrastructure investments.
Develop a Rupee–Dirham bond market: Listing Indian Masala Bonds and green infrastructure bonds in ADGM can help UAE banks reinvest accumulated rupees, making local currency settlement more practical.
Strategic food security treaty: India can provide quota-based exemptions to the UAE from sudden export bans on key food items like rice, wheat and sugar, while the UAE can commit investment in I2U2 Food Parks.
Defence co-production: The defence partnership should move towards joint IP and co-production in drones, AI surveillance, desert-warfare electronics and maritime security technologies.
Skill harmonisation: A joint Skills Passport system can align Indian vocational certifications with UAE standards, helping Indian workers move into higher-value technical jobs.
Green maritime corridor: India and the UAE can strengthen the JNPT/Mundra–Jebel Ali route through digital customs, e-Bills of Lading and green-fuel shipping to reduce logistics costs.
Digital public infrastructure integration: Beyond payments, both countries can link digital health records, SME credit histories and verified educational credentials for smoother business and workforce mobility.
Green hydrogen partnership: India can produce low-cost green hydrogen, while the UAE can invest in shipping, storage and global marketing, positioning both countries as key clean-energy suppliers to Europe.

India–UAE relations have moved beyond transactional trade and energy ties to a mature, multi-dimensional strategic partnership. The growing defence cooperation reflects deepening trust and shared interests in regional security, maritime stability and technological collaboration.

Amid West Asian volatility, India’s approach balances stronger engagement with the UAE while preserving strategic autonomy and commitment to peace. This partnership is crucial for India’s energy security, diaspora welfare, economic interests and expanding role in the Gulf region.

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