Overview
The UAE-India relationship is among the most structurally significant bilateral partnerships in the federation’s portfolio. The Comprehensive Economic Partnership Agreement has accelerated trade liberalisation across more than 80 percent of product lines. India’s 3.5 million-strong diaspora in the UAE constitutes nearly 30 percent of the total population, creating human infrastructure that underpins economic integration. The India-Middle East-Europe Economic Corridor positions both nations within a transformative trade architecture connecting South Asia to European markets through the Arabian Peninsula.
Strategic Context
CEPA entered into force in 2022 with the target of increasing bilateral non-oil trade from USD 45 billion to USD 100 billion within five years. India’s demographic trajectory positions it as the world’s most important long-term consumer market. The I2U2 grouping of India, Israel, UAE, and the United States provides a minilateral framework for coordinating technology and economic initiatives. Defence cooperation has expanded through joint naval exercises and intelligence sharing, driven by shared Indian Ocean security concerns. Rupee-dirham settlement mechanisms reduce dollar dependence in bilateral trade finance.
Key Dynamics
| Domain | Dynamic | Strategic Impact |
|---|---|---|
| Trade | CEPA eliminating tariffs on 80%+ product lines | Accelerated bilateral trade growth |
| Infrastructure | IMEC corridor development | UAE as logistics hub between India and Europe |
| Diaspora | 3.5 million Indian residents | Labour market foundation, remittance flows |
| Defence | Joint naval exercises, I2U2 framework | Indian Ocean security coordination |
| Finance | Rupee-dirham settlement mechanism | Currency diversification channel |
UAE Positioning
Abu Dhabi treats the India relationship as its most important long-term economic growth partnership. The UAE positions itself as India’s gateway to the Middle East and Africa, leveraging logistics infrastructure, financial services, and regulatory frameworks that Indian firms need to access regional markets. Sovereign wealth fund investments in Indian technology and infrastructure sectors deepen capital market integration. The relationship is structurally aligned with US strategic objectives, avoiding the competitive pressures that characterise the China partnership.
Vision 2031 Implications
India represents the single largest growth market for UAE non-oil trade diversification under the 2031 framework. CEPA and IMEC provide institutional mechanisms that will deepen integration regardless of political cycles. The primary risk is Indian protectionism in agriculture and data localisation, which could constrain the partnership’s upside. If IMEC achieves even partial implementation, the UAE’s position as a trade intermediary between South Asia and Europe would be structurally locked in for decades.