India and the Gulf: India-UAE Relations Explained

Few relationships in India’s foreign policy have changed as quickly, or matter as much to ordinary households, as India-UAE relations and India’s wider ties with the Gulf. The Gulf Cooperation Council (GCC) brings together six countries on the Arabian Peninsula: the United Arab Emirates, Saudi Arabia, Qatar, Kuwait, Oman and Bahrain. For India, this neighbourhood across the Arabian Sea is home to millions of workers, a major source of oil and gas, a large trading partner and a growing strategic ally.

The relationship rests on four big pillars: the diaspora, energy, trade and investment, and strategic cooperation. This explainer walks through each pillar, the long history behind it, the newer partnerships such as the India-UAE CEPA, I2U2 and the India-Middle East-Europe Economic Corridor (IMEC), and the everyday question of how India looks after its workers in the region. Figures are approximate and dated, because they change from year to year.

Ancient Roots: Dhows, Monsoons and the Gulf Rupee

India and the Arabian Peninsula have traded for thousands of years. Archaeologists link the Indus Valley (Harappan) civilisation with the Mesopotamian world through the Gulf, and Mesopotamian records speak of distant lands such as Dilmun, Magan and Meluhha, the last widely identified with the Indus region. Pearls, textiles, spices, timber and beads moved on seagoing boats long before modern states existed.

The monsoon highway

The seasonal monsoon winds powered this trade. Wooden dhows from Gujarat, Kutch, Malabar and the Konkan coast sailed to Oman, the Trucial coast and Basra on the south-west winds and returned on the north-east winds. Arab and Indian merchants settled in each other’s ports, and words, foods, music and family names crossed the sea with them. Kerala’s long links with the Gulf reach back to this age of sail.

When the rupee was the Gulf’s money

One of the least-known chapters is monetary. In the mid-twentieth century the Gulf economies used the Indian rupee. After independence the Reserve Bank of India issued a special “Gulf rupee” (also called the external rupee) from 1959 for use in the Gulf region, including Kuwait, Bahrain, Qatar, the Trucial States (today’s UAE) and Oman, partly so that gold smuggling and the outflow of ordinary rupees could be curbed. Kuwait moved to its own dinar in 1961, and the others replaced the Gulf rupee in the years after the rupee’s devaluation in 1966. The episode shows how deeply the two shores were once tied together.

From Transactional to Strategic Partnership

For decades after independence, India’s engagement with the Gulf was largely transactional: it bought oil and sent workers. The oil boom of the 1970s created huge demand for labour, and millions of Indians, many from Kerala, went to the region. Diplomacy followed the migrants rather than leading them.

The turning point came in the 1990s and 2000s. After the 1990-91 Gulf War, which forced a vast evacuation of Indians from Kuwait and Iraq, New Delhi began taking the region more seriously. Over time the approach shifted from a simple buyer-seller relationship to a multi-dimensional partnership covering security, technology, food security, investment and culture. India’s “Look West” and later “Link West” thinking expressed this change, as did regular high-level visits in both directions. Today the UAE and Saudi Arabia are treated as strategic partners rather than only as suppliers and employers.

Milestones on the road

• 1972: India and the UAE establish diplomatic relations soon after the UAE’s formation.
• 1981: The GCC is formed, giving India a regional bloc to engage with.
• 2017: India and the UAE elevate ties to a Comprehensive Strategic Partnership.
• 2019: India and Saudi Arabia set up a Strategic Partnership Council.
• 2022: The India-UAE CEPA comes into force and I2U2 holds its first leaders’ summit.
• 2023: IMEC is announced at the G20 in New Delhi.
• 2024: The BAPS Hindu Mandir in Abu Dhabi is inaugurated.

Pillar One: The Diaspora and Remittances

The first and most human pillar is the diaspora. Around 9 million Indians live and work in the Gulf, making it the largest overseas Indian community in any region of the world. The UAE and Saudi Arabia host the biggest numbers, each in the range of several million, while Kuwait, Qatar, Oman and Bahrain together host a few million more. In the UAE, Indians are the largest single expatriate group and make up a very large share of the resident population.

Who are they?

The community is remarkably varied. Many are blue-collar workers in construction, hospitality, transport and domestic work. Many others are engineers, doctors, nurses, chartered accountants, bankers, teachers, traders and entrepreneurs. Families have often lived in the Gulf for two or three generations, even though most cannot become citizens, and children study in Indian-curriculum schools that operate across the region.

A bridge between societies

Because the Gulf states are home to far more expatriates than citizens, the Indian community is an economic pillar of these countries as well as an asset for India. Gulf governments regularly acknowledge this contribution. For India, the diaspora acts as an informal ambassador, building trust that official diplomacy alone could not.

The money that comes home

India is the world’s largest recipient of remittances, receiving more than US$100 billion a year in recent years, far more than a decade earlier. Historically the Gulf has accounted for the lion’s share, with the UAE and Saudi Arabia among the biggest individual source countries, though rising incomes of Indians in the United States, the United Kingdom and Singapore have reduced the Gulf’s share somewhat.

These funds matter at the household level. They pay for food, housing, education, healthcare and weddings, and in some states they shape the whole economy. Kerala is the best-known example, where Gulf money transformed villages, built homes and schools, and supported banking and small business. Other states such as Telangana, Andhra Pradesh, Tamil Nadu, Punjab, Uttar Pradesh and Bihar also draw on migrant income.

Why remittances matter nationally

• They help finance part of India’s current account gap and add to foreign exchange inflows.
• They are more stable than many other capital flows and tend to rise when families back home need help.
• Digital links, such as connecting India’s UPI with payment systems in the UAE, are making transfers cheaper and faster.

Pillar Two: Energy Security

The second pillar is energy. India imports most of the crude oil it consumes, and the Gulf is its single most important source region. Saudi Arabia, the UAE and Kuwait have all featured among India’s major suppliers, alongside Iraq, a close neighbour of the GCC. The region also provides a large part of India’s LPG, the cooking fuel used in millions of homes. Qatar is the main source of India’s liquefied natural gas (LNG) under a long-term contract with an Indian importer.

Strategic petroleum reserves

Energy cooperation goes beyond buying and selling. India has built underground strategic petroleum reserves at Visakhapatnam, Mangaluru and Padur to protect against supply shocks. The UAE’s national oil company agreed to store crude in the Mangaluru cavern, an unusual arrangement in which a supplier helps fill India’s emergency stock, and Gulf firms have shown interest in storage and refining partnerships.

A two-way street

India also supplies refined fuels to the Gulf and its energy relationship is shifting towards new fields: renewable power, green hydrogen, grid links and clean technology. As both sides plan for a lower-carbon future, the old pattern of crude for rupees and dirhams is slowly widening into a joint energy-transition story. For India, the Gulf remains central to energy security, which is why peace in the region is a national interest and not only a foreign-policy preference.

Pillar Three: Trade, the India-UAE CEPA and Investment

The third pillar is trade and investment. The UAE has long ranked among India’s top trading partners, often within the first three or four worldwide, and is one of the main export destinations for Indian goods. Dubai’s ports and free zones serve as a re-export hub to Africa, West Asia and Central Asia. Indian exports include refined petroleum products, gems and jewellery, rice, textiles, machinery and pharmaceuticals, while the UAE sells crude oil, gold and chemicals.

The landmark CEPA

The India-UAE Comprehensive Economic Partnership Agreement (CEPA) was signed on 18 February 2022 and entered into force on 1 May 2022, after unusually quick negotiations. It cut or removed duties on a large majority of tariff lines, opened services trade in areas such as IT, health and construction, and set up cooperation on rules of origin, digital trade and investment. The two countries have spoken of lifting non-oil bilateral trade to around US$100 billion by 2030.

Gulf capital in India

Gulf sovereign wealth and public funds are major investors in India. Abu Dhabi and other emirates have placed funds in Indian infrastructure, ports, renewable energy, logistics and start-ups, including through India’s National Investment and Infrastructure Fund. In turn, Indian firms invest in the Gulf, and both sides have discussed a bilateral investment treaty. A move towards local-currency settlement of trade in rupees and dirhams, agreed in 2023, aims to reduce transaction costs and dependence on third currencies.

Pillar Four: Strategic and Security Cooperation

The fourth pillar, once thin, has grown quickly. India and the Gulf states share concerns about terrorism, extremism, piracy, maritime security and the safety of the sea lanes through which most of their oil and trade pass. Intelligence sharing, extradition arrangements and joint action against terror financing and radicalisation have become routine themes in high-level talks.

Defence and maritime ties

• India holds bilateral exercises with the navies, armies and air forces of several GCC countries.
• Indian naval ships regularly visit Gulf ports, and Oman has given the Indian Navy access to facilities at Duqm, a useful anchor on the western Indian Ocean.
• Defence industry cooperation, training exchanges and joint production are slowly expanding.

Food and technology security

The Gulf imports most of its food, and India is a leading supplier of rice, sugar, spices, vegetables and other staples. Investment in Indian food corridors and cold-chain infrastructure ties the relationship to food security. Cooperation in space, artificial intelligence, fintech and data is the newest strand and reflects a partnership of equals.

Minilaterals: I2U2 and the India-Middle East-Europe Corridor

India has also built new groupings with Gulf partners, small clubs designed around specific goals rather than large treaties.

I2U2

I2U2 brings together India, Israel, the UAE and the United States; the name draws on the initials of the members. It began in 2021 as an economic forum and held its first leaders’ summit, virtually, in 2022. It focuses on food security, water, energy, transport, space and health, and has been described as a “West Asian Quad”.

IMEC

The India-Middle East-Europe Economic Corridor (IMEC) was announced at the G20 summit in New Delhi in September 2023 through a memorandum of understanding between India, the United States, Saudi Arabia, the UAE and the European Union, with France, Germany and Italy also signing. The plan links Indian ports by sea to the Gulf, then by rail across the Arabian Peninsula, and again by sea to Europe. Alongside shipping and rail, it envisages electricity grids, a clean-hydrogen pipeline and high-speed data cables. IMEC is long term and depends on regional stability, finance and political agreement, but it has become a symbol of the Gulf’s central place in India’s connectivity vision.

A Careful Balancing Act: De-hyphenation in West Asia

West Asia is a region of rivalries, and India has tried to keep friendly relations with all sides, a policy often described as de-hyphenation. In plain terms, New Delhi does not treat its ties with one country as a trade-off against another. India builds partnerships with the Gulf Arab states, Israel and Iran separately, each on its own merits.

• Gulf Arab states: energy, workers, investment and security.
• Israel: defence, agriculture, water and technology, through formal ties established in 1992.
• Iran: historic energy links, the Chabahar port project and connectivity to Afghanistan and Central Asia.

The approach works because India avoids joining military blocs and focuses on economic interests. It also protects the large Indian communities living in countries that may themselves be rivals. The real test comes during crises, when New Delhi urges dialogue, protects its citizens and keeps lines open to every side.

Welfare of Indian Workers

With so many Indians abroad, protecting them is one of the most serious tasks of Indian diplomacy.

The kafala issue and labour reforms

Many Gulf countries have used the kafala (sponsorship) system, under which a worker’s legal status depends on an employer. Critics say it can lead to confiscated passports, unpaid wages and difficulty changing jobs. In recent years several states have reformed it. Qatar, for example, introduced a non-discriminatory minimum wage and removed exit-permit and no-objection-certificate requirements around 2020, partly in the run-up to the 2022 FIFA World Cup, while the UAE and Saudi Arabia have launched wage-protection systems and new contract rules.

India’s support systems

• The Protector of Emigrants system and the eMigrate portal regulate recruitment, with “Emigration Check Required” passports for some categories of workers.
• The Indian Community Welfare Fund supports distressed workers with shelter, legal aid and repatriation, and Indian missions run helplines.
• The MADAD portal handles consular grievances, and the Pravasi Bharatiya Bima Yojana provides insurance for emigrant workers.

Evacuations

India has carried out some of the world’s largest civilian evacuations from the region: the 1990 airlift from Kuwait (often cited as among the biggest in history), Operation Raahat from Yemen in 2015, and repatriation flights under the Vande Bharat Mission during the 2020 pandemic. These operations became part of India’s diplomatic identity and reassure workers that their government will come for them in a crisis.

India’s Key Partners in the GCC

Each of the six GCC states has its own personality in India’s foreign policy, as the table below shows.

India-Saudi ties in brief

Saudi Arabia is the Gulf’s largest economy, a leading oil supplier and the host of holy sites that draw lakhs of Indian pilgrims each year for Haj and Umrah. In 2019 the two countries established the Strategic Partnership Council, with committees on political and security matters and on economy and investment. Energy, refining, defence, food trade and the welfare of Indian workers are the main themes.

India-GCC trade talks

India has held on-and-off talks on a free trade agreement with the GCC as a bloc since the mid-2000s. Negotiations have progressed unevenly, which is partly why bilateral deals such as the India-UAE CEPA have taken the lead.

Culture, People and the Road Ahead

People-to-people links are among the warmest parts of the relationship. Bollywood films, Indian cuisine, cricket (Sharjah and Dubai are famous venues), yoga and festivals such as Diwali and Eid are shared pleasures. Indian-run schools, hospitals and businesses are woven into everyday life across the Gulf, and Pravasi Bharatiya Divas, observed each 9 January, celebrates the diaspora’s role.

The BAPS Hindu Mandir

A powerful symbol is the BAPS Hindu Mandir in Abu Dhabi, a large stone temple on land gifted by the UAE government and inaugurated in February 2024. Its construction, with stone carved in India, drew widespread attention as an example of religious harmony and the UAE’s policy of tolerance. Gulf cities also host gurdwaras, churches and other places of worship used by Indian communities.

Challenges

• Localisation policies: programmes such as Emiratisation and Saudisation aim to create more jobs for citizens, which may affect expatriate hiring in some sectors.
• Oil-price swings and automation: these can alter employment and remittances.
• Regional conflict: instability threatens shipping lanes, energy supplies and the safety of Indians.
• Skills and recruitment: India is working to improve training, recruitment ethics and legal safeguards.

Overall, the Gulf matters to India for its people, its energy, its markets, its capital and its security. The partnership is likely to grow as both sides diversify away from oil, deepen digital and green cooperation, and turn connectivity projects such as IMEC into reality.

Frequently Asked Questions

How many Indians live in the Gulf?

Roughly 9 million Indians live and work in the six GCC countries, which makes it the largest overseas Indian community in any single region. The UAE and Saudi Arabia host the largest numbers. Estimates vary from year to year as workers come and go.

What is the India-UAE CEPA?

The Comprehensive Economic Partnership Agreement is a free trade pact signed on 18 February 2022 and in force since 1 May 2022. It reduces or removes tariffs on most goods and opens up services, investment and digital trade. The two countries aim to take non-oil trade to around US$100 billion by 2030.

Why is the Gulf important for India’s energy security?

The Gulf supplies a large share of India’s crude oil, LPG and LNG, and it sits on key shipping lanes. India’s strategic petroleum reserves are partly filled through arrangements with Gulf suppliers. Stability in the region is therefore directly linked to fuel availability and prices in India.

What are I2U2 and IMEC?

I2U2 is a grouping of India, Israel, the UAE and the United States that works on food, water, energy, transport and technology projects. IMEC, announced at the 2023 G20 summit in New Delhi, proposes a shipping and rail corridor linking India with the Gulf and Europe, along with energy and data links. Both reflect India’s growing role in West Asia.

How does India protect its workers in the Gulf?

India regulates recruitment through the eMigrate system and Protector of Emigrants offices, and offers help through embassy helplines, the Indian Community Welfare Fund and the MADAD portal. It also encourages Gulf states to improve labour laws, including reforms to the kafala sponsorship system. In emergencies, India has launched large evacuations such as Operation Raahat from Yemen in 2015.

What is the BAPS Hindu temple in Abu Dhabi?

It is a large traditional stone Hindu temple built on land gifted by the UAE government and inaugurated in February 2024. It is widely seen as a symbol of cultural ties and religious tolerance between India and the UAE. It draws visitors of many faiths.

{“@context”:”https://schema.org”,”@graph”:[{“@type”:”FAQPage”,”mainEntity”:[{“@type”:”Question”,”name”:”How many Indians live in the Gulf?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”Roughly 9 million Indians live and work in the six GCC countries, which makes it the largest overseas Indian community in any single region. The UAE and Saudi Arabia host the largest numbers. Estimates vary from year to year as workers come and go.”}},{“@type”:”Question”,”name”:”What is the India-UAE CEPA?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”The Comprehensive Economic Partnership Agreement is a free trade pact signed on 18 February 2022 and in force since 1 May 2022. It reduces or removes tariffs on most goods and opens up services, investment and digital trade. The two countries aim to take non-oil trade to around US$100 billion by 2030.”}},{“@type”:”Question”,”name”:”Why is the Gulf important for India’s energy security?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”The Gulf supplies a large share of India’s crude oil, LPG and LNG, and it sits on key shipping lanes. India’s strategic petroleum reserves are partly filled through arrangements with Gulf suppliers. Stability in the region is therefore directly linked to fuel availability and prices in India.”}},{“@type”:”Question”,”name”:”What are I2U2 and IMEC?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”I2U2 is a grouping of India, Israel, the UAE and the United States that works on food, water, energy, transport and technology projects. IMEC, announced at the 2023 G20 summit in New Delhi, proposes a shipping and rail corridor linking India with the Gulf and Europe, along with energy and data links. Both reflect India’s growing role in West Asia.”}},{“@type”:”Question”,”name”:”How does India protect its workers in the Gulf?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”India regulates recruitment through the eMigrate system and Protector of Emigrants offices, and offers help through embassy helplines, the Indian Community Welfare Fund and the MADAD portal. It also encourages Gulf states to improve labour laws, including reforms to the kafala sponsorship system. In emergencies, India has launched large evacuations such as Operation Raahat from Yemen in 2015.”}},{“@type”:”Question”,”name”:”What is the BAPS Hindu temple in Abu Dhabi?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”It is a large traditional stone Hindu temple built on land gifted by the UAE government and inaugurated in February 2024. It is widely seen as a symbol of cultural ties and religious tolerance between India and the UAE. It draws visitors of many faiths.”}}]}]}