Crown Prince of Abu Dhabi, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, arrived in India on Sunday to a warm reception, marking the start of his two-day maiden visit aimed at strengthening bilateral ties in areas such as energy and connectivity amid rising tensions in West Asia.
Commerce and Industry Minister Piyush Goyal welcomed the Crown Prince at the airport, where he was given a ceremonial reception, highlighting the significance India has placed on the visit.
External Affairs Ministry Spokesperson Randhir Jaiswal remarked on social media platform ‘X’ that the visit represented a new milestone in the historic relationship between the two nations, noting the ceremonial welcome given by Minister Goyal.
The Crown Prince is accompanied by several UAE ministers and a business delegation. After completing the Delhi segment of his trip, Al Nahyan will head to Mumbai to attend a business forum, where leading business figures from both countries will participate.
According to the Ministry of External Affairs (MEA), the visit will further strengthen India-UAE relations and explore opportunities for collaboration in emerging sectors. Prime Minister Modi and the Crown Prince are set to hold discussions on Monday.
Under Prime Minister Narendra Modi’s leadership since 2014, India’s engagement with the UAE has significantly expanded across various sectors. The UAE has become a key pillar of India’s outreach to the Gulf region. While India’s ‘Think West’ policy has emphasized engagement with West Asia, its relationship with the UAE has surpassed those with other countries in the region. Modi’s seventh visit to the UAE during his 10-year tenure as Prime Minister indicates a personal initiative and commitment to strengthening the relationship. PM has highlighted the depth of the partnership between the two countries by describing India and the UAE as “partners in progress.”
Defence and secuirity ties
Defence and security cooperation between India and the UAE has seen significant enhancement. Both countries share similar concerns regarding security issues in their neighboring regions. Key issues of mutual concern include terrorism, piracy, the safety of sea lines of communication, illegal drugs and arms trafficking, and money laundering. The instability in the West Asian region, including the Arab unrest, spread of terrorism, rise of the ISIS caliphate, and ongoing civil wars, has been instrumental in bringing the two countries closer, leading to stronger engagements in defence and security.
An MoU on defence cooperation was signed in 2003, followed by another MoU on security cooperation in 2011. The defence cooperation between India and the UAE encompasses training, joint naval and air exercises, high-level visits, and participation in defence exhibitions. During his 2014 visit to the UAE, Prime Minister Modi stressed the importance of bolstering defence cooperation, including the production of defence equipment in India. Both countries also underscored the need to enhance cooperation in areas such as counterterrorism, counter-radicalism, intelligence sharing, cyber security, and maritime security.
Close ties between India and UAE
India and the United Arab Emirates (UAE) have maintained close ties since the 1970s due to geographical proximity, cultural connections, and longstanding friendship. In recent years, these relations have significantly deepened.
Trade relations have strengthened, particularly following the Russia-Ukraine war. Several recent developments in commerce and culture have ushered in a new era in India-UAE relations.
The central banks of both nations have recently approved the use of local currencies—rupees and dirhams—for cross-border transactions, including trade, remittances, and investments. Additionally, India’s payment system, UPI, has been linked to UAE’s instant payment system, Aani, benefiting over 3.5 million Indians living in the UAE, as well as travelers between the two countries. India’s Rupay cards are also now accepted in the UAE.
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Multilateral Cooperation
Beyond their shared bilateral interests, India and the UAE have effectively collaborated on multilateral fronts. The establishment of the India–Israel–UAE–US (I2U2) grouping exemplifies a successful minilateral partnership involving both nations. The Abraham Accords, signed in 2020 between Israel and Arab Gulf countries such as the UAE and Bahrain, have been beneficial for India. This agreement marked a significant shift in the historically intricate relations between Israel and the Arab nations, leading to the creation of the I2U2 grouping with Israel and the US.
Under the I2U2 framework, the UAE plans to invest US$2 billion in India to develop integrated food parks aimed at addressing food security concerns. The I2U2 grouping emphasizes cooperation in technology, energy, food and water security, and agriculture. Formed after the Abraham Accords normalized relations between Israel and the UAE, the I2U2 minilateral is also significant for promoting regional harmony and peace.
During its G20 presidency, India invited the UAE as a guest country. The UAE took part in several meetings across India and is a key participant in the India–Middle East–Europe Economic Corridor (IMEC). This trade and transit corridor connects India, West Asia, and Europe, enhancing the UAE’s strategic importance for India. The IMEC strengthens economic interdependency and transit links between the two nations. During Prime Minister Modi’s visit to the UAE in February 2024, a Memorandum of Understanding was signed on the Inter-Governmental Framework Agreement for the India–Middle East–Europe Economic Corridor, marking progress towards the corridor’s goals.
Comprehensive Economic Partnership AgreemenT (CEPA) between India and UAE
The landmark Comprehensive Economic Partnership Agreement (CEPA), signed in February 2022, has provided a major boost to trade. The UAE is India’s second-largest export destination after the US, and India is the UAE’s second-largest trading partner after China.
CEPA aims to reach a bilateral trade target of $100 billion in the next five years, offering tariff reductions, fast-tracked business approvals, and access to trade zones. This has led to a rise in trade between the two nations, from $72.9 billion in FY22 to $84.5 billion in FY23. During CEPA’s implementation (from May 2022 to March 2023), bilateral trade grew by 14% year-on-year, with 90% of India’s exports to the UAE now enjoying zero duty under the FTA, particularly benefiting sectors such as gems and jewelry, pharmaceuticals, food, and energy.
CEPA with the UAE is India’s first agreement with a complementary economy, contrasting with previous agreements with countries like South Korea and Japan. S
UAE is India’s fourth largest foreign investor
In FY23, the UAE became India’s fourth-largest foreign investor, up from seventh place in FY22. A total of $3.3 billion in FDI flowed from the UAE to India during this period. Additionally, the Abu Dhabi Investment Authority (ADIA) actively participates in the Indian stock market, holding investments in 22 listed companies, worth over ₹3,447 crore, spanning sectors like real estate, infrastructure, and logistics. Reports suggest that ADIA is establishing a $4-5 billion fund to invest in India through GIFT City, Gujarat.
Inspired by Saudi Arabia’s Vision Fund, UAE funds, including ADIA, Mubadala, and ADQ, have also invested in Indian startups. Companies like Jio Platforms, Reliance Retail, Byjus, Greenko, and Lenskart are among the beneficiaries of these investments.
UAE: An attractive destination for Indian companies
Several prominent UAE companies, such as DP World, Sharaf, and Lulu Group, have operations in India. Similarly, Indian firms like L&T, ONGC, and Adani Group are active in the UAE. According to the Dubai Chamber of Commerce, 15,481 new Indian-owned companies joined the organization in 2023, marking a 38% year-on-year increase.
UAE’s business-friendly environment makes it an attractive destination for Indian companies, especially those looking to expand into Africa and the Gulf Cooperation Council (GCC) countries.
UAE among major contributors to India’s foreign remittance inflow
Approximately 30% of the UAE’s population—around 3.5 million people—are Indians. Dubai and Sharjah, in particular, are popular destinations, often described as “an India without the everyday hassle.” The UAE’s efforts to build a knowledge-based economy have also recognized the contributions of Indian professionals, including investors, entrepreneurs, doctors, scientists, and creatives, many of whom have benefited from the Golden Visa scheme.
A recent World Bank report indicated that the UAE and other GCC countries are major contributors to India’s foreign remittance inflow, and the use of local currencies in cross-border transactions is expected to further increase this.
UAE among India’s close allies
Both nations have increasingly showcased their strengthened relationship on the global stage. Prime Minister Narendra Modi has visited the UAE seven times during his 10-year tenure. In a cultural milestone, Modi recently inaugurated a ₹700-crore BAPS temple in Abu Dhabi, built on land donated by UAE ruler Sheikh Mohamed bin Zayed Al Nahyan. This temple is the third in the UAE and the largest in the Middle East, cementing the UAE as one of India’s closest allies.
Challenges and way forward
Trade analysts have noted that while CEPA has increased trade, it has yet to significantly impact new sectors. Additionally, India’s exports to the UAE are largely import-dependent, resulting in low value addition.
Analysts have cautioned that while India’s exports to the UAE are rising, imports from the UAE have also increased, growing by 19% year-on-year in FY23 to $53.23 billion. They note that gems, jewelry, petroleum, and smartphones account for 60% of India’s exports to the UAE, indicating a lack of trade diversification. Value-added jewelry exports are on the rise, with the growing lab-grown diamond market expected to contribute to future growth.
