India–UAE relations have evolved from transactional energy ties to a comprehensive strategic partnership marked by growing economic and geopolitical convergence. Examine. Are there any hindrances to the relationship? (15M, 250 Words)

India–UAE relations have undergone a structural transformation over the past decade, particularly after the signing of the Comprehensive Economic Partnership Agreement (CEPA), 2022. With bilateral trade crossing $100 billion in FY 2024–25 and a revised target of $200 billion by 2032, the partnership today reflects deep economic integration, strategic trust, and geopolitical alignment in West Asia.

Key Areas of growing convergence

1.    Economic & Trade Integration

1. CEPA eliminated or reduced duties on nearly 90% of tariff lines, institutionalising market access and accelerating trade growth.
2. The UAE has emerged as India’s third-largest trading partner and a key FDI source, with investments exceeding $22 billion since 2000.

2.   Energy Partnership

1. Energy ties have matured beyond transactional oil imports, with long-term LNG agreements such as the 10-year pact between HPCL and ADNOC.
2. Simultaneously, cooperation in green hydrogen, renewable energy, and Small Modular Reactors reflects alignment in energy transition goals.

3.   Defence Cooperation

1. The signing of a Letter of Intent for a Strategic Defence Partnership in 2026 signals movement toward defence industrial collaboration and interoperability.
2. Joint exercises such as Desert Cyclone demonstrate growing operational coordination in maritime and air domains.
3. The UAE’s de-hyphenation of India from Pakistan, evident in inviting India as Guest of Honour to the OIC in 2019, underscores geopolitical convergence.

4.   Geoeconomics

1. The India–Middle East–Europe Economic Corridor (IMEC) positions the UAE as India’s gateway to West Asia and Europe.
2. Investments by DP World and commitments toward Dholera Special Investment Region illustrate a transition from portfolio flows to greenfield asset creation.

5.   Digital Integration

1. Integration of UPI with AANI and RuPay with JAYWAN has reduced remittance costs for the 3.5 million-strong Indian diaspora.
2. Collaboration between C-DAC and UAE’s G42 for supercomputing clusters reflects movement toward high-end technological interdependence.

Major hindrances in the relationship

1.    Structural Trade Imbalance

1. Despite trade expansion, India faces a trade deficit of approximately $26 billion due to heavy energy imports.
2. Concerns also persist regarding re-export of third-country goods through UAE free zones.

2.   Geopolitical Vulnerability of IMEC

1. Regional instability, particularly the Israel–Gaza conflict, has stalled parts of the IMEC corridor.
2. This exposes the fragility of connectivity projects dependent on West Asian geopolitical stability.

3.   Energy Transition Paradox

1. India must deepen hydrocarbon imports for immediate energy security even while pursuing long-term decarbonisation goals (Net Zero 2070).
2. This dual-track approach creates tension between fossil fuel dependency and green partnership ambitions.

4.   Diaspora Concerns: The UAE’s 8% Emiratisation mandate for firms may impact Indian white-collar employment.

5.   Strategic Hedging with China: The UAE’s engagement with Chinese technology and infrastructure firms, including Huawei, introduces a strategic dilemma for India.

Conclusion: India–UAE relations have evolved into a multidimensional strategic partnership encompassing trade, energy transition, defence, fintech, and connectivity. If both nations institutionalise dispute-resolution mechanisms, strengthen local currency settlement systems, and operationalise green and digital corridors, the partnership can become a model of resilient South – West Asian integration in a multipolar world.

+1 Value Addition

• Bilateral trade crossed $100 billion in FY 2024–25.
• Target of $200 billion trade by 2032.
• Indian diaspora in UAE: 3.5 million.
• Trade deficit: $26 billion mainly energy driven.
• 10-year LNG agreement between HPCL and ADNOC signed in 2026.

La Excellence IAS Academy, the best IAS coaching in Hyderabad, known for delivering quality content and conceptual clarity for UPSC 2026 preparation.

FOLLOW US ON:

◉ YouTube : https://www.youtube.com/@CivilsPrepTeam

◉ Facebook: https://www.facebook.com/LaExcellenceIAS

◉ Instagram: https://www.instagram.com/laexcellenceiasacademy/

GET IN TOUCH:

Contact us at info@laex.in, https://laex.in/contact-us/

or Call us @ +91 9052 29 2929, +91 9052 99 2929, +91 9154 24 2140

OUR BRANCHES:
Head Office: H No: 1-10-225A, Beside AEVA Fertility Center, Ashok Nagar Extension, VV Giri Nagar, Ashok Nagar, Hyderabad, 500020

Madhapur: Flat no: 301, survey no 58-60, Guttala begumpet Madhapur metro pillar: 1524,  Rangareddy Hyderabad, Telangana 500081

Bangalore: Plot No: 99, 2nd floor, 80 Feet Road, Beside Poorvika Mobiles, Chandra Layout, Attiguppe, Near Vijaya Nagara, Bengaluru, 560040