India and the UAE’s future is largely intertwined and bound. 

Strategic Partnership 

The UAE today is a strategic partner in every sense with Abu Dhabi, standing shoulder to shoulder in the fight against cross-border terror and international crimes. The Indian diaspora in the UAE is no longer a pushover but the biggest community, contributing to the growth of the UAE while boosting the domestic economy. 

The two are not only focused on West Asia but the collaboration and partnership stretches to the critical Indian Ocean Region as well.

Few would have imagined a decade back that India and the UAE could consider putting in place defence industry cooperation, considering that Abu Dhabi had pursued a buyer-seller policy for decades. 

However, bilateral defence cooperation between India and the UAE has been steadily growing in consonance with other domains of the bilateral relationship. It is steered through a Joint Defence Co-operation Committee (JDCC) at the ministry level. There has been a renewed focus on forging partnerships and joint ventures between the defence manufacturers from both sides. 

Towards this, the first-ever India UAE Defence Industry Cooperation Forum was held under the aegis of the Department of Defence Production in 2024. The forum brought together industry leaders and government officials from both countries to explore opportunities for collaboration in the defence manufacturing sector and technology. 

During the visit of UAE President Sheikh Mohammed Bin Zayed Al Nahyan in January, India and the UAE signed a Letter of Intent for finalising a Strategic Defence Partnership (SDP) framework to strengthen the defence partnership.

Economic Bonds

The last decade has witnessed a transformational change in the overall ties between India and UAE. Bilateral trade cooperation has been a focus area with the signing of a Comprehensive Economic Partnership Agreement in 2022. From US$ 180 million annually in the 1970s, bilateral trade reached US$ 100.06 billion in FY 2024-25. 

Today the UAE ranks as India's third-largest trading partner and second largest export destination, with exports over US$ 36.63 billion in FY 2024-25. Meanwhile, India is UAE’s second largest trading partner. The trade basket between the two nations is well diversified, encompassing major items like petroleum products, gems and jewellery, food items, textiles, chemicals, and engineering goods. Both sides have set a target to double bilateral trade to US$ 200 billion by 2032.

Investment has also become a significant component of this partnership. From April 2000 to March 2025, the cumulative foreign direct investment (FDI) from the UAE into India amounted to US$ 22.84 billion, making the Gulf major the seventh-largest overseas investor for India. 

UAE’s investments are well-diversified with a focus on sectors like real estate, infrastructure, energy, private equity, and financial services. 

Not just that. The UAE’s Sovereign Wealth Funds (SWF) too have a strong presence in India. Abu Dhabi Investment Authority (ADIA), UAE’s largest SWF, has already set up a subsidiary office in GIFT City, Gujarat.

Indian investments in the UAE are as significant. A large number of Indian companies has set up manufacturing units, either as joint ventures or in the Special Economic Zones, producing cement, building materials, textiles, engineering products, consumer electronics. Additionally, Indian companies have invested in UAE’s tourism, hospitality, catering, healthcare, retail, and education sectors too.  

Partnership For Future

Besides defence, trade, and investments, India and the UAE are rapidly transforming their partnership into a high-tech alliance focused on artificial intelligence (AI), supercomputing and space moving beyond traditional trade. Key initiatives include building an 8-exaflop AI supercomputer, strengthening digital public infrastructure, and developing a "data embassy". A major 8-exaflop national AI supercomputer is being developed jointly by Abu Dhabi’s G42 and India’s Centre for Development of Advanced Computing (C-DAC). Besides, the two are collaborating on human-centric AI models and establishing AI research hubs. This cooperation leverages India's tech talent and the UAE's investment capacity. 

The UAE is keen to expand supercomputing clusters and data center capacity within India. India's Unified Payments Interface (UPI) is being linked with UAE platforms to streamline cross-border transactions. Both countries are in fact exploring partnerships in small modular reactors and nuclear power plant operations. 

The UAE is diversifying its economy, while India is seeking infrastructure investment, fostering a "tech power duo" partnership. 

The Emirati leadership is steadily carving out ways to reduce dependence on oil revenues and push towards making UAE a technology hub of the region. 

Indeed, the India-UAE partnership needs to be explored in the context of the wider West Asia and Eastern African region along the Indian Ocean Region in the development sphere. 

But New Delhi needs to be cautious. It needs to steer clear of the UAE’s political ambitions in the larger West Asia-North Africa region as New Delhi’s interests lie in robust ties with several players in the region. 

(The writer is a commentator on geopolitics and geoeconomics. Views expressed are personal.)