Over the past decade, India’s ties with the United Arab Emirates (UAE) have strengthened significantly across multiple domains. India’s “Think West” policy has strategically prioritized engagement with West Asia, with the UAE emerging as a cornerstone of this outreach in the Gulf region.
Prime Minister Narendra Modi has personally championed the advancement of this bilateral relationship, making history with his 2015 visit — the first by an Indian prime minister in 34 years. Since then, Modi has made six additional visits to the UAE, including one in February this year, where he hailed India and the Emirates as “partners in progress.”
In the intervening time, India’s relations with the UAE have blossomed into a multifaceted partnership. Migration, business, and defense-security are the core pillars of this burgeoning relationship, which the Modi-led government has aimed to invigorate as part of broader efforts to re-establish India as a crucial player in West Asia and a rising power on the world stage.
The Bharatiya Janata Party (BJP)-led National Democratic Alliance has reclaimed power in India, albeit with a narrower majority in parliament. As Narendra Modi resumes his role as prime minister, he is likely to continue prioritizing foreign policy goals from his previous two terms, including fortifying ties with Gulf Arab states, especially the UAE.
The Indian Expatriate Community in the UAE: Linchpin of the Bilateral Relationship
With the establishment of the Comprehensive Strategic Partnership (CSP) in 2017, India-UAE relationship reached new heights. Central to the relationship is the Indian expatriate community, which plays a key role in the UAE’s economy as well as in bolstering foreign remittances to India.
Indian expatriates are an integral part of UAE’s business community, labor force, and overall society. Of the estimated 7.93 million Indian nationals living in the Gulf, more than 3.5 million reside in UA, including many second or third generation UAE-born Indians. In fact, Indians constitute the largest ethnic community in the Emirates, accounting for about 30% of the country’s population and outnumbering even Emirati citizens.
According to figures compiled by the Indian Government, 65% of Indians employed in the UAE fall into the blue-collar category (employed mostly in construction companies, municipalities, and agricultural farms); 20% are white collar non-professionals (clerical staff, shop assistants, salesmen, accountants, etc.); and 15% are professionals and businessmen.
Indian companies have made significant inroads in the Emirates. By the end of 2022, 83,000 Indian-owned companies were registered with the Dubai Chambers, and Indians owned 30% of Dubai’s startups. Successful Indian entrepreneurs have established notable national franchises such as Lulu Hypermarkets, Landmark Group Jashanmal, Ajmal Perfumes, Amber Packaging Industries, and Jumbo Electronics. Major Indian enterprises such as L&T, ONGC, and the Adani Group also operate in the UAE.
Several factors have drawn a growing number of non-resident Indians and Indian firms to the UAE. Job seekers are lured by the promise of higher salaries, improved living standards, and favorable career opportunities in diverse and thriving sectors, including technology, finance, healthcare, and hospitality. Indian business owners, investors, and entrepreneurs can seamlessly connect with global markets, bypassing the cumbersome bureaucracy and high taxes often encountered in India. Importantly, many Indian companies are looking to leverage the UAE’s reexport potential, aligning with the latter’s ambition to emerge as a “nerve-center of international commerce.”
The Emirati authorities have instituted measures to facilitate access to residency and work authorization. In late 2020, the UAE introduced a new category of work permits, enabling individuals to live and work in the city in fields such as legal consulting and software design, even if their employers are based elsewhere. A growing number of Indian professionals are beneficiaries of the Golden Visa scheme — a long-term residency-for-investment arrangement for individuals and their families. Additionally, the Indian Consulate in Dubai launched a retraining and skills-building program for blue-collar Indian workers that aligns with the requirements of the Emirates’ job market.
The prominence and accessibility of Indian culture have also played a significant role in attracting Indians to the UAE. Indian expats discover communities where they can experience familiar language, attire, cuisine, entertainment, and religious spaces. Middle-class Indians in the UAE have established a network of cultural associations. Organizations such as the India Club, Indian Association, Goan Cultural Society, and numerous Keralite associations support the cultural networks of Indian sub-communities. Additionally, schools like the Abu Dhabi Indian School and The Indian High School in Dubai offer Indian curricula to expatriate students.
Indian Workers and Firms: Fueling Remittance, Trade, and Investment Flows
The increasing Indian expatriate population and strong presence of Indian companies in the UAE have driven the growth of remittances and have contributed to the rise in non-oil trade and investment flows. The World Migration Report 2024, which highlighted the India-UAE corridor as the third-largest international migration route after Mexico-US and Syria-Turkey, also identified India as the world’s top recipient of remittances in 2022. Another report, this time by the World Bank, identified the UAE as the second-largest source of India’s remittances that year, comprising 18% of the total.
The UAE is India’s third-largest trade partner after the U.S. and China. Trade in energy has been a mainstay of India-UAE relations. The UAE continues to rank among India’s largest suppliers of crude oil and liquefied natural gas (LNG). However, India and the UAE last year set an ambitious target of doubling non-oil bilateral trade to $100 billion by 2030. The India-UAE Comprehensive Economic Partnership Agreement (CEPA), effective from May 1, 2022, has already helped boost trade, which reached $84.8 billion in 2022-2023. This agreement offers numerous benefits, including the removal of tariffs and other barriers to cross-border trade of services. CEPA covers 11 service sectors and over 100 sub-sectors, ranging from business, financial and insurance, to telecommunications, transport, tourism, and health-related services.
Additional initiatives have strengthened trade relations. In July 2023, the two governments launched a Local Currency Settlement (LCS) System to promote the use of the Indian Rupee and UAE Dirham for cross-border transactions. Subsequently, agreements were signed to link their instant payment platforms — India’s Unified Payment Interface (UPI) with the UAE’s AANI — and their domestic debit and credit card systems — India’s RuPay with the UAE’s Jaywan. These digital payment linkages aim to facilitate seamless cross-border transactions.
The increase in trade volumes is expected to create a ripple effect, unlocking investment opportunities that will benefit businesses and the broader economy. Indian investments in overseas real estate, particularly in Dubai, are experiencing a significant surge, driven by immigration programs like the Golden Visa and attractive rental yields. Indian investors made significant contributions to Dubai’s residential market, with purchases exceeding $4 billion in 2022. The bilateral investment treaty signed in February 2024 is anticipated to further boost investment activity between the two countries.
Meanwhile, the UAE emerged in 2023 as the fourth-largest investor in India and the seventh-largest source of foreign direct investment (FDI) overall. Importantly, there has also been a surge in investment in the other direction. FDI from UAE to India rose from a little over $1 billion in 2021-2022 to $3.35 billion in 2022-2023. Emirati investments in India primarily focus on five sectors: commercial and residential real estate, ceramics and glass, transport and warehousing, financial services, and coal, oil, and gas.
Abu Dhabi Investment Authority (ADIA), the Emirates’ largest sovereign wealth find (SWF) holds 22 listed stocks, including stakes in Reliance subsidiaries Retail Ventures and Jio Platforms, as well as in warehouse assets. Reuters has reported that ADIA is setting up a $4-5 billion fund to invest in India through GIFT City, Gujarat. Mubadala has invested in Manipal Health Enterprises, Avanse Financial Services, Tata Power Renewables. Additionally, Abu Dhabi Developmental Holding Company (ADQ) has invested in Indian Edtech Startup Byju.
The strengthening trade and investment ties between India and the UAE have materialized in projects that facilitate the integration of the two economies and extend their reach to distant markets. DP World, one of the world’s largest port operators, is the main Middle Eastern corporate player in India’s maritime logistics sector. In 2021, DP World signed an MoU with the government of Tamil Nadu to invest in a new container terminal. In 2023 it won a concession to develop and operate a mega-container terminal at Tuna Tekra in Gujarat. DP World also boasts one of India’s most extensive logistics networks, which includes three economic zones under development in Mumbai, Chennai, and Cochin. In addition, Emirati and Indian firms are seeking to collaborate on projects in third countries, such as AD Ports, a rapidly expanding port operator that is partnering with India’s Adani Ports to explore strategic joint investments in Tanzania’s logistics infrastructure.
The Delhi-Abu Dhabi Strategic Nexus and the Minilateral Method
The rise of flexible, task-oriented minilateral groupings has opened new avenues for advancing India-UAE cooperation. After convening their inaugural France-India-UAE trilateral foreign-ministerial meeting in September 2022, India and the UAE now participate in bilateral, trilateral, and quadrilateral engagements. These formats reflect the evolving framework of a strategic relationship between Delhi and Abu Dhabi that continues to expand and deepen.
In 2021, India and the UAE, along with the U.S. and Israel, announced a “Partnership for the Future,” which soon became known as the I2U2 format. This cross-regional grouping has identified six priority areas for cooperation and investment: water, energy, transportation, space, health, and food security. The first two projects announced by I2U2 member countries relate to food security and clean energy. One project involves utilizing Israeli and American technology to establish integrated food parks in Gujarat and Madhya Pradesh, with plans for future expansion into other states. This initiative is being financed by the Abu Dhabi Development Holding Company (ADQ). The other project aims to establish a hybrid renewable energy facility (combining wind and solar) in Gujarat, developed with Israeli expertise and supported by investments from the UAE and the U.S.
The France-India-UAE partnership establishes the trilateral framework as a forum for advancing collaboration in solar and nuclear energy, climate action, biodiversity conservation, and defense, especially within the Indian Ocean region. In support of the UAE’s hosting of COP 28 in 2023, the initiative emphasized critical environmental challenges including single-use plastic pollution, desertification, and food security.
The India-Middle East-Europe Economic Corridor (IMEE), unveiled in September 2023 after discussions in New Delhi, represents yet another potentially significant avenue for deepening ties between India and the UAE. The proposed corridor’s eastern leg would facilitate container traffic from India to the UAE, leveraging established shipping routes from India’s west coast to connect with the corridor’s overland route. This initiative promises to enhance economic integration and connectivity between India, the Middle East, and Europe, with the UAE serving as a pivotal hub within this strategic framework.
The Defense-Security Side of Complementary Visions
Under the leadership of Prime Minister Narendra Modi and President Sheikh Mohamed bin Zayed Al Nahyan, the vision of the UAE as a crucial transcontinental gateway with a diversified economy complements India’s aspiration to become a global manufacturing hub. The Gulf region holds a pivotal position in India’s “extended neighborhood,” not only because of its geographical proximity but also as an area where India’s economic interests are expanding and where its influence is growing. Given India’s strong stake in Gulf stability, it is unsurprising that its relations with regional partners, including the UAE, have evolved to encompass defense and security cooperation.
Over the past decade, the UAE has emerged as India’s key regional defense partner. A Memorandum of Understanding (MoU) on defense cooperation signed in 2003 and another MoU on security cooperation signed in 2011 laid the foundation for these ties. Defense collaboration is coordinated through a Joint Defense Cooperation Committee (JDCC) at the Ministry level and Naval Staff Talks at the HQ level. In August 2015, India and the UAE elevated their relationship to a “comprehensive strategic partnership” and establish a “strategic security dialogue.” Since then, cooperation in defense and security has continued to show promise.
Various forms of defense cooperation have materialized between India and the UAE in recent years. These include defense training and capacity building, regular port calls, joint naval and air exercises, the Annual Defense Dialogue, and high-level visits. Enhanced intelligence sharing and counter-terrorism collaboration have also played important roles in exchanging views and experiences. practical measures such as enhanced cooperation in the exchange of financial intelligence related to money laundering and terrorist financing, cybersecurity, drug trafficking and various transnational crimes. With threats from terrorist organizations and other non-state actors still active, cooperation in the areas of counter-terrorism and cyber security as well as information and intelligence sharing have also become some of the trademarks of military-security ties between the two countries.
India’s primary regional defense and security objective is to ensure that sea lines of communication remain open. The convergence of strategic interests between India and the UAE in maintaining maritime security has led to increased coordination. The UAE and its Gulf Arab neighbors are members of the Indian Navy-conceived Indian Ocean Naval Symposium (IONS), established in 2008 as a biennial forum for navy chiefs of the Indian Ocean littoral.
The UAE has expressed interest in buying BrahMos and Akash missiles. There have also been discussions about joint defense equipment production, as both countries aim to scale up their indigenous defense industries. In February 2023, EDGE, UAE’s leading defense group, signed an MoU with India’s aerospace firm Hindustan Aeronautics (HAL) to explore areas of cooperation including joint design and development of missile systems and unmanned aerial vehicles (UAVs). The same month, the Indian firm ICOMM, a company under the Megha Engineering & Infrastructures Ltd (MEIL) group, signed an agreement with the UAE-based small arms company CARACAL to manufacture in India CARACAL’s complete line of small arms for the Indian market.
Conclusion
India-UAE relations are flourishing, driven by a convergence of interests and determined, pragmatic leadership. However, several factors could complicate the relationship, such as the UAE’s ties with Pakistan, with which India has long had hostile relations, and its growing ties with China, with which India’s relations have become increasingly strained. Despite these challenges, Abu Dhabi and Delhi seem to recognize the futility of zero-sum approaches to foreign affairs and are determined to ensure that their partnership stands on its own merits, independent of bilateral relations with third countries.
Additionally, the UAE has embraced the Modi-led Bharatiya Janata Party (BJP) government despite increasing attacks on Muslims in India by Hindu nationalist groups. In fact, Prime Minister Modi received the Emirates’ top civilian honor in 2019, even as he revoked the statehood of the disputed Muslim-majority region of Kashmir.
Lastly, the seven-month war in Gaza and ongoing Houthi attacks on commercial vessels in the Red Sea have dimmed the prospects for the full realization of the India-Middle East Corridor. Yet India and the UAE remain undeterred. In February, they signed a framework agreement to advance the project. More recently, it was reported that India is considering starting work on the eastern leg of the corridor, which would take container traffic from India to the UAE and could be extended further once the regional crisis abates.
With Modi at the helm, India has leveraged its economic and strategic interests to deepen its ties with the Gulf Arab countries. Building a thriving, multifaceted relationship with the UAE has been a key component of this effort. As Modi enters his third term, it is likely that this partnership will continue to progress.
