Why in News?

The President of the UAE paid an official visit to India amid shifting Gulf geopolitics. The visit produced wide-ranging agreements in trade, defence, technology, energy, nuclear cooperation, and digital infrastructure—strengthening India’s ties with an increasingly influential Middle Eastern power.

Key Outcomes of the Visit

1. Trade & Economic Engagement

• Building on the 2022 Comprehensive Economic Partnership Agreement (CEPA), bilateral trade touched USD 100 billion in FY 2024–25.
• A new target was set: USD 200 billion by 2032.
• Initiatives fast-tracked:
  • Bharat Mart (Dubai)
  • Virtual Trade Corridor
  • Bharat–Africa Setu
• India invited UAE sovereign wealth funds to invest in the NIIF.
• Discussed UAE partnership in Dholera Special Investment Region (Gujarat)—airport, port, township, and MRO ecosystem.

2. Energy & Nuclear Cooperation

• Signed a 10-year LNG supply agreement (from 2028).
• Agreed to cooperate on advanced nuclear technologies including Small Modular Reactors (SMRs) under India’s SHANTI Act, 2025.

3. Technology, Digital Infrastructure & AI

• Cooperation expanded to AI, supercomputing, and data centres.
• Agreed to explore establishing Data Embassies—critical sovereign data stored on foreign soil under diplomatic protection.
• Strengthening digital public infrastructure linkages (UPI–Aani, Digilocker–UAE platforms).

4. Defence & Security

• Defence flagged as a core pillar.
• Welcomed increased joint military engagements (e.g., Zayed Talwar naval exercise).
• Signed a Letter of Intent for a Strategic Defence Partnership.
• Reaffirmed joint action against terrorism and terror financing under FATF.

5. Cultural, Education & Mobility

• Decision to establish a House of India in Abu Dhabi.
• Encouraged greater university collaborations and student exchanges.
• Work ongoing to interlink national payment platforms for cross-border payments.

Data Embassy – Key Concept (UPSC Important)

• An offshore data centre storing a nation’s critical digital information under diplomatic protection.
• Legal Status:
  • Physical facility: Host country jurisdiction
  • Data: Home country-exclusive jurisdiction (inviolable)
• First in the world: Estonia’s 2017 Data Embassy (Luxembourg).
• India–UAE agreement establishes India’s first data embassy.

Geopolitical Context Behind the Visit

1. UAE–Saudi Tensions

• Divergence in Yemen, Sudan, and Somalia.
• UAE backs the Southern Transitional Council; Saudi backs the internationally recognised government.

2. Emerging Saudi–Pakistan–Turkey Axis

• Saudi–Pakistan defence cooperation and Turkey’s role contrast with India’s minilaterals like I2U2 and IMEC with UAE and Israel.

3. US–Iran Hostilities

• Heightened risks in the Gulf.
• UAE helps India diversify energy and maintain communication channels.

4. Board of Peace (Gaza)

• India and UAE invited; partnership aids coordinated influence in post-conflict Gaza reconstruction.

India–UAE Bilateral Relations: Current Assessment

Economic

• UAE is India’s 3rd largest trading partner and 2nd largest export destination.
• UAE investments in India: USD 20–21 billion, plus a USD 75 billion infrastructure commitment.

Energy

• UAE is India’s 4th largest crude oil supplier and a key LNG/LPG source.
• Petroleum accounts for over 41% of bilateral trade.

Financial Integration

• RuPay and UPI adoption in UAE.
• 2023 Local Currency Settlement (LCS) enables INR-AED trade (gold, crude, food).

Defence

• Growing UAE interest in Indian platforms: BrahMos, Akash, Tejas.
• Joint exercises: Desert Cyclone, Zayed Talwar.

People-to-People Relations

• Indian diaspora: 3.5 million (≈35% of UAE population).
• BAPS Mandir in Abu Dhabi marks a cultural milestone.

Regional & Multilateral Engagement

• UAE crucial in Abraham Accords, IMEC, I2U2.
• Stability in the Gulf directly impacts India’s energy security.

Challenges in India–UAE Relations

1. Regional Rivalries

• Managing UAE–Saudi frictions, Iran–Arab tensions while balancing India’s ties with all.

2. UAE–China Deepening Ties

• China’s investments, defence supplies (e.g., L-15 jets) challenge India’s strategic space.

3. UAE–Pakistan Relations

• UAE’s financial support to Pakistan raises concerns given Pakistan’s terror links.

4. Structural Trade Issues

• Limited diversification in trade post-CEPA.
• NTBs like Halal certification, SPS/TBT standards restrict Indian exports.

5. Emerging Climate–Energy Contradictions

• Different net-zero timelines (UAE 2050; India 2070).
• India’s push for renewables vs. UAE’s hydrocarbon export dependence.

What Should India Do? – Policy Recommendations

1. Build a Joint Green Energy Corridor

• Joint investments in:
  • Green hydrogen
  • Solar and wind
  • Desalination technologies
• Establish an India–UAE Climate Research Centre.

2. Use UAE as a Gateway to GCC & Africa

• Expand CEPA-type agreements with GCC/GAFTA nations.
• Leverage UAE’s re-export capability for Indian textiles, pharmaceuticals, handicrafts.

3. Accelerate Investment Flows

• Fast-track UAE investments in:
  • GIFT City
  • Smart cities & logistics
  • Renewable energy
• Create a Bilateral Investment Fast-Track Mechanism.

4. Institutionalise Strategic Dialogue

• Strengthen the Joint Commission with fixed timelines.
• Advocate for Kafala reforms for Indian migrant welfare (on Qatar’s model).

Conclusion

The visit reflects a maturing India–UAE Comprehensive Strategic Partnership, marked by expanded cooperation in trade, defence, digital integration, energy, and geopolitics.
However, to realise the full potential of CEPA and new-age collaborations, India must carefully navigate:

• Gulf rivalries
• China’s presence in the region
• Energy transition challenges
• Structural trade barriers

Strategic, economic, and digital convergence make the India–UAE partnership a key pillar of India’s West Asia policy and Indo-Pacific outreach.

PSC Civil Services Examination Previous Year Questions (PYQs) Prelims 

Q. Which of the following is not a member of ‘Gulf Cooperation Council’? (2016)  

(a) Iran 

(b) Saudi Arabia 

(c) Oman 

(d) Kuwait 

Ans: (a) 

Q.Consider the following statements: (2008)  

1. Ajman is one of the seven Emirates of the UAE. 
2. Ras al-Khaimah was the last Sheikhdom to join the UAE. 

Which of the statements given above is/are correct?  

(a) 1 only 

(b) 2 only 

(c) Both 1 and 2   

(d) Neither 1 nor 2  

Ans: (c)

Practice Questions

 Q1. With reference to Data Embassies, consider the following statements:

1. A Data Embassy functions under the complete jurisdiction of the host country, including legal access to the stored data.
2. India’s first Data Embassy is being set up in the United Arab Emirates.
3. Estonia established the world’s first Data Embassy in Luxembourg.

Which of the statements given above is/are correct?

A. 1 and 2 only
B. 2 only
C. 2 and 3 only
D. 1, 2 and 3

Answer: C

Q2. India’s strategic engagement with the UAE has recently expanded due to which of the following developments?

1. Rising tensions between Saudi Arabia and the UAE in Yemen and other regions.
2. Formation of a Saudi–Pakistan–Turkey security axis.
3. Increased risks of a U.S.–Iran confrontation in the Gulf region.
4. Establishment of the Board of Peace for Gaza, to which both India and the UAE have been invited.

Select the correct answer using the code below:

A. 1, 2 and 3 only
B. 1, 3 and 4 only
C. 2 and 4 only
D. 1, 2, 3 and 4

Answer: D