India–UAE Engagement Amid Regional Flux | 21 Jan 2026

Source: IE 

Why in News? 

The President of the United Arab Emirates (UAE) paid an official visit to India amid regional flux, during which both countries agreed on a wide range of bilateral agreements and outcomes spanning defence, space cooperation, and LNG. 

What are the Key Highlights of the UAE President's visit to India? 

• Trade Ambition: Building on the 2022 CEPA, bilateral trade reached USD 100 billion in FY 2024–25; leaders set a target to double bilateral trade to USD 200 billion by 2032. 
• Economic & Investment Initiatives: Directed officials to connect MSMEs and expedite Bharat Mart, Virtual Trade Corridor, and Bharat-Africa Setu initiatives. 
  • India invited UAE sovereign wealth funds to participate in the National Investment & Infrastructure Fund (NIIF). 
  • Both sides welcomed discussions for a UAE partnership in Gujarat's Dholera Special Investment Region, envisioning infrastructure like an airport, port, township, and MRO (Maintenance, Repair and Operations) facility. 
• Energy & Nuclear Cooperation: Signed a 10-year LNG supply agreement (starting from 2028). Agreed to explore partnership in advanced nuclear technologies, including Small Modular Reactors (SMRs), following India's SHANTI Act, 2025. 
• Technology & Innovation: Agreed to deepen cooperation in AI and emerging technologies, including a supercomputing cluster and exploring data centres in India. Directed teams to explore establishing 'Data Embassies' under mutual sovereignty arrangements. 
• Counter-Terrorism: Reiterated unequivocal condemnation of terrorism, including cross-border terrorism, and agreed to continue cooperation within FATF against terror financing. 
• Food Security & Culture: Reaffirmed commitment to enhancing cooperation in food security and decided to establish a 'House of India' in Abu Dhabi as a symbol of friendship. 
• Education & Connectivity: Encouraged greater university linkages and student exchanges; welcomed work to integrate India's Digilocker with UAE platforms for academic document authentication. Aimed to interlink national payment platforms for cross-border payments. 
• Defence & Security: Acknowledged defence cooperation as a core pillar, welcomed recent military exchanges and exercises (e.g., Zayed Talwar naval exercise), and noted the signing of a Letter of Intent for a Strategic Defence Partnership. 

How are India-UAE Bilateral Relations? 

• Economic & Commercial Ties: Bilateral trade has surged from USD 180 million in the 1970s to USD 100 billion in 2024–25, elevating the UAE to India's 3rd-largest trading partner (after US and China) and 2nd-largest export destination. UAE investments in India stand at USD 20–21 billion, with a USD 75 billion infrastructure commitment. 
• Energy Security: As India's 4th-largest crude oil source and major supplier of LNG and LPG, the UAE is pivotal to India's energy security. This is underscored by petroleum products constituting 41.4% of total bilateral trade, valued at USD35.10 billion till FY 2021–22. 
• Financial Integration: The introduction of India's RuPay card and Unified Payments Interface (UPI) in the UAE underscores growing financial collaboration. This was formalized by the 2023 Local Currency Settlement (LCS) System MoU, promoting Indian Rupee and AED (United Arab Emirates Dirham) for cross-border transactions, which is already in use for trade in gold, crude oil, and food products. 
• Defence and Security Cooperation: UAE-India defence cooperation has strengthened through counter-terrorism, intelligence sharing, and joint military exercises like Exercise Desert Cyclone. This period also saw growing UAE interest in Indian defence products including the BrahMos missile, Akash air defence system, and Tejas fighter jet. 
• Cultural & People-to-People Links: The Indian diaspora in the UAE numbecapproximately 3.5 million (about 35% of UAE’s population) contribute significantly through remittances (18% of India’s total remittances). The BAPS Mandir in Abu Dhabi marks the first traditional Hindu temple in the UAE and symbolizes deepening ties. 
• Regional Stability: The UAE's importance for regional stability—highlighted by its role in the Abraham Accords and its normalisation of relations with Israel—is critical for India, which is heavily dependent on Gulf energy. This strategic role is further reflected in multilateral frameworks like the I2U2 grouping and the India-Middle East-Europe Economic Corridor (IMEC). 

What are the Challenges in India-UAE Relations? 

• Regional Rivalries: India must account for the sharp escalation in tensions between Saudi Arabia and the UAE over Yemen. The UAE backs the Southern Transitional Council, while Saudi Arabia supports the internationally recognised Presidential Leadership Council. 
  • India's diplomatic strategy must balance its historical relations with Iran amidst the ongoing Iran-Arab tensions, while carefully managing ties with the UAE. 
• Strategic Competition and External Influence: The UAE's deepening strategic and economic ties with China, including in defence cooperation through deals like the acquisition of Chinese L-15 aircraft, pose a direct challenge as China’s "Cheque Book Diplomacy" overshadows Indian ventures. 
• Concerns Over UAE’s Pakistan Policy: The UAE’s substantial financial assistance to Pakistan (e.g., USD 3 billion pledge in 2019) raises Indian concerns about the potential misuse of funds, given Pakistan’s history of sponsoring cross-border terrorism against India. 
• Structural Trade Barriers: Trade remains concentrated in traditional sectors (gems & jewellery, petroleum, smartphones), showing limited diversification despite the CEPA. Key Non-Tariff Barriers (NTBs) such as mandatory Halal certification, Sanitary and Phytosanitary (SPS) measures, and Technical Barriers to Trade (TBT) impede Indian exports. 
• Future Economic Alignment: The diverging net-zero targets (UAE 2050, India 2070) and India’s push for 50% renewable energy by 2030 challenge the traditional hydrocarbon-based relationship, as the UAE’s oil export interests potentially conflict with India’s green goals. 

What Steps Should India Take to Boost Cooperation with the UAE? 

• Joint Green Energy & Sustainability Corridor: Implement a India-UAE Green Energy Corridor for joint renewable energy investments, green hydrogen technology transfer, and desalination research. A complementary joint climate change research center, focused on desert ecology and sustainable urban development, could leverage Indian expertise and UAE funding. 
• Leverage the UAE as a Gateway for Regional Integration: India should leverage the UAE’s position within the Gulf Cooperation Council (GCC) and the Greater Arab Free Trade Area (GAFTA) to advocate for similar CEPA-style agreements with other member nations.  
  • It should also utilize the UAE’s role as a re-export hub to integrate key Indian products—such as handlooms, handicrafts, textiles, and pharma—into supply chains accessing African and broader Middle Eastern markets. 
• Expand Investment Flows: Facilitate UAE investments in priority Indian projects (e.g., GIFT City) while encouraging reciprocal Indian investments in UAE sectors; establish dedicated bilateral investment task forces to monitor and fast-track high-value proposals. 
• Strategic Dialogues and Joint Advocacy: India must institutionalize high-level reviews with clear timelines via the Joint Commission to ensure diplomatic momentum, while advocating for Kafala system reforms to protect Indian migrants' rights and welfare, following Qatar’s precedent (abolished in 2020). 

Conclusion 

The UAE President’s visit underscores a deepening India–UAE strategic partnership, expanding cooperation in trade, defence, energy, technology, and people-to-people ties. While opportunities in CEPA-led trade, green energy, and digital integration are significant, India must balance regional rivalries, China’s influence, and structural trade barriers to sustain long-term cooperation.