India-UAE Bilateral Trade and Investment Profile

India-UAE relations have evolved into a strategic partnership in the post-COVID-19 era, emphasizing mutually beneficial collaboration in defense, energy, and critical minerals. The UAE ranks among the top 10 investors in India. The Abu Dhabi Investment Authority (ADIA), one of the world’s largest sovereign wealth funds, has expanded its investments in sectors like aviation, telecommunications, and technology.

The UAE’s role as a major investor and key trade partner underscores its significance in India’s economic growth. Simultaneously, India’s increasing global influence makes it a valuable ally for the UAE, especially in technology, renewable energy, and security.

A critical driver of this partnership’s growth is its multidimensional nature. While trade and energy have been longstanding pillars, new areas like defense, space exploration, education, and climate change are adding further depth.

India-UAE MoU on civil nuclear cooperation

In a historic first, India and the UAE signed a Memorandum of Understanding (MoU) on September 9, 2024, to cooperate on civil nuclear energy. The agreement was signed between India’s Nuclear Power Corporation of India Limited (NPCIL) and the Emirates Nuclear Energy Company (ENEC), which leads operations at the Barakah Nuclear Power Plant. The MoU was formalized during the visit of Abu Dhabi’s Crown Prince, Sheikh Khalid bin Mohamed bin Zayed Al Nahyan, to India.

This collaboration comes after Indian Prime Minister Narendra Modi’s visit to the UAE in 2015, where both nations agreed to cooperate on the peaceful use of nuclear energy, including areas such as safety, health, agriculture, and scientific advancements. The MoU aligns with the UAE’s broader strategy to increase investments in the nuclear energy sector.

Key areas of India-UAE collaboration

Multilateral cooperation and economic integration

The collaboration between India and the UAE has expanded across multiple platforms, including the formation of the India-Israel-UAE-US (I2U2) grouping. This alliance focuses on technology, energy, food, and water security, with the UAE investing US$2 billion in India’s food parks to address regional food security challenges. Additionally, the UAE’s role in the India-Middle East-Europe Economic Corridor (IMEC) also deepens the economic interdependence between the two countries by improving trade routes.

Trilateral cooperation

India and the UAE share robust cooperation within international forums, particularly the United Nations. Apart from I2U2 (India-Israel-UAE-USA), both nations are involved in various plurilateral frameworks, such as BRICS and the UAE-France-India (UFI) trilateral group.

On September 19, 2022, the foreign ministers of France, India, and the UAE met on the sidelines of the UN General Assembly in New York and launched a trilateral cooperation framework. A subsequent telephonic conversation among the three countries’ ministers took place on February 4, 2023. According to India’s Ministry of External Affairs (MEA), all three parties agreed that the trilateral initiative would focus on promoting collaborative projects in energy, particularly solar and nuclear energy.

LNG supply and additional agreements

In addition to the nuclear cooperation MoU, several other key agreements have been signed between India and the UAE in 2024. One MoU established a long-term LNG supply partnership between Abu Dhabi National Oil Company (ADNOC) and Indian Oil Corporation Limited. Another agreement between ADNOC and India Strategic Petroleum Reserve Limited (ISPRL) was finalized during the visit. Additionally, Urja Bharat and ADNOC signed a Production Concession Agreement for Abu Dhabi’s Onshore Block 1.

A fifth MoU was signed between the state government of Gujarat and Abu Dhabi Developmental Holding Company PJSC (ADQ) for the development of food parks in India. This initiative aligns with the goals of the I2U2 grouping, which includes plans for food parks in Gujarat and Madhya Pradesh.

India-GCC cooperation

The visit of the Crown Prince in September 2024, and the signing of these agreements indicate the evolving and dynamic relationship between India and the UAE.

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In the same month, the first-ever India-Gulf Cooperation Council (GCC) Foreign Ministers’ meeting took place in Riyadh from September 8-9. At this meeting, India’s External Affairs Minister S. Jaishankar emphasized the critical role of the GCC in global energy supply, noting that India, as one of the world’s largest and fastest-growing markets, will drive much of the future demand.

Economic and commercial ties

Tracing the trade history of India and the UAE, it initially centered around commodities like dates, pearls, and fish. However, this trade dynamic shifted significantly following the UAE’s discovery of oil, with oil exports beginning from Abu Dhabi in 1962. India’s exports to the UAE grew steadily after the country unified in 1971, but the major turning point came in the early 1990s when Dubai emerged as a regional trading hub, coinciding with India’s economic liberalization.

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The evolving India-UAE trade relationship has contributed to the deepening strategic partnership between the two nations. The total trade between India and the UAE, which was valued at US$180 million annually in the 1970s, surged to US$83.65 billion in 2023-24, making the UAE India’s third-largest trading partner after USA and China. The UAE is also India’s second-largest export destination, accounting for nearly US$35.6 billion in 2023-24.

Source: Department of Commerce, Ministry of Commerce and Industry, GoI

Trade relations between India and the UAE have flourished, with the UAE becoming India’s third-largest trading partner. Bilateral trade grew from US$59.5 billion in 2013-2014 to US$83.6 billion in 2023-2024, a growth driven by the 2022 Comprehensive Economic Partnership Agreement (CEPA), which reduced trade barriers and boosted investments.

Source: Department of Commerce, Ministry of Commerce and Industry, GoI

India’s exports to the UAE are diversified and include petroleum products, precious metals, gems and jewelry, minerals, food items (cereals, sugar, fruits, vegetables, tea, meat, and seafood), textiles, and engineering goods. According to India’s Department of Commerce, in FY 2023-24, mineral oils were the top export commodities from India to UAE.  

Source: Department of Commerce, Ministry of Commerce and Industry, GoI

India’s key imports from the UAE consist of petroleum products, precious metals, gems, jewelry, minerals, chemicals, and wood products. The UAE is India’s fourth-largest source of crude oil and the second-largest supplier of LNG and liquefied petroleum gas (LPG).

Local currency settlements

In a landmark move to further boost trade, India and the UAE signed an MoU in July 2023, establishing a Local Currency Settlement (LCS) system between the Reserve Bank of India and the Central Bank of the UAE. This system enables cross-border trade using local currencies (INR and AED) and has already been implemented for transactions involving gold, crude oil, and food products.

India-UAE FDI

The UAE ranks as the seventh-largest investor in India, with foreign direct investments (FDI) reaching US$19 billion between April 2000 and June 2024. The amount of FDI from the UAE to India during FY 2023-24 reached US$2.9 billion.

Source: Factsheet, DPIIT, GoI

Source: Statista

UAE investments in India are substantial, estimated at US$20-21 billion. Of this, US$15.5 billion is in the form of FDI, and the rest is through portfolio investments (FPIs) between April 2000 and March 2023.

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The UAE has been one of the largest FDI sources for India in the past 2-3 years. The country pledged to invest US$75 billion in India’s infrastructure sector in 2017. ADIA, one of the world’s largest sovereign wealth funds, is a leading investor in India’s National Infrastructure Investment Fund (NIIF), contributing US$1 billion. ADIA has also made significant investments in sectors like affordable housing, renewable energy, and highways and has recently opened an office in Gujarat’s GIFT City. India’s central government has implemented various measures since 2020 to encourage investments from ADIA and other UAE sovereign funds.

Defense and security cooperation

In recent years, India and the UAE have elevated their defense cooperation, conducting joint naval and air exercises, high-level visits, and exhibitions. The UAE’s interest in acquiring BrahMos and Akash missiles and Light Combat Aircraft (LCA) Tejas underscores the growing defense collaboration. Counter-terrorism has also emerged as a priority, with both nations working together to combat radicalism and enhance cyber security.

Space and education partnerships

The space sector is another area of expanding cooperation. Since signing an MoU in 2016, the Indian Space Research Organisation (ISRO) has launched UAE satellites, including the Nayif-1 nanosatellite in 2017.

Space cooperation has broadened with Indian participation in the Abu Dhabi Space Debate in 2022.

Educational ties have also been strengthened, highlighted by the establishment of an IIT campus in Abu Dhabi, symbolizing growing collaboration in science and technology.

Conclusion

India and the UAE are deepening their Comprehensive Strategic Partnership with the recent visit of Abu Dhabi’s Crown Prince, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, to India. This first visit in his role emphasizes the growing significance of India-UAE relations. Since 2015, the partnership between the two countries has flourished, leading to key agreements such as the CEPA in 2022 and the Local Currency Settlement System in 2023.

Trade between the two nations reached US$83.6 billion in 2023-24, with expectations of further growth. The UAE, India’s largest Arab trading partner, is also a major investor and vital to India’s energy security, accounting for 8 percent of its crude oil imports.

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