India-Gulf Relations: $162 Billion Trade and Expanding Strategic Ties

New Delhi: India’s engagement with the Gulf Cooperation Council (GCC) countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE—has reached unprecedented levels, making the region one of India’s most crucial trade, investment, and strategic partners.

With bilateral trade touching $162 billion in FY 2023-24 and deepening cooperation in energy, security and connectivity, the partnership is evolving beyond traditional engagements.

Last year, Prime Minister Narendra Modi visited Abu Dhabi, where he met President Sheikh Mohamed bin Zayed Al Nahyan. During the visit, both leaders witnessed the exchange of several key agreements, including the Bilateral Investment Treaty, an MoU on electricity interconnection and trade, and an Intergovernmental Framework Agreement for the India-Middle East-Europe Economic Corridor (IMEEC).

Other agreements covered digital infrastructure projects, maritime heritage development, financial cooperation, and the interlinking of India’s UPI with UAE’s AANI, as well as RuPay with JAYWAN.

Later it was reported that NPCI International Payments Limited and Magnati, a payment solution company in UAE, partnered to expand the availability of UPI payments for Indian tourists in the UAE.

However, this week, PM Modi met Qatar’s Emir Sheikh Tamim Bin Hamad Al-Thani in New Delhi, where the two leaders held extensive bilateral talks at Hyderabad House. Discussions focused on enhancing trade, investment, technology, energy, food security, culture, and people-to-people ties.

Both sides explored the potential of a free trade agreement and set a target to double bilateral trade to $28 billion within five years.

The Ministry of External Affairs stated that energy security was a key agenda item, with discussions on expanding cooperation. Financial collaboration was also highlighted, with both nations signing an agreement to avoid double taxation and prevent fiscal evasion on income taxes.

Deepening Political and Strategic Ties

India’s diplomatic outreach in the Gulf has been marked by high-level visits and strengthened strategic alliances. Since May 2014, the Indian Prime Minister has visited Gulf countries 14 times, reflecting the importance of the region in India’s foreign policy.

India now has formal strategic partnerships with the UAE, Saudi Arabia, Oman, Kuwait and Qatar. Additionally, the first India-GCC Ministerial Meeting for Strategic Dialogue, held in Riyadh in September 2024, laid the foundation for a Joint Action Plan, covering diverse areas such as trade, investment, security, energy, health, agriculture, food security and transportation.

Trade and Investment: A Thriving Economic Partnership

India’s trade with the GCC countries stood at $162 billion in FY 2023-24, making it one of India’s largest regional trading partners. Imports from the Gulf, mainly petroleum and petrochemical products, totalled $105.9 billion, while Indian exports, including cereals, food items, jewellery, synthetic fibres and textiles, reached $56.3 billion.

GCC countries have also been significant investors in India, particularly through sovereign wealth funds. The India-UAE Comprehensive Economic Partnership Agreement (CEPA), signed in 2022, has facilitated greater trade diversification and a similar framework is being explored with other GCC nations.

The India-Middle East-Europe Economic Corridor (IMEEC)

A landmark initiative boosting India-Gulf connectivity is the India-Middle East-Europe Economic Corridor (IMEEC), which was formalized during the G20 Leaders’ Summit in New Delhi in September 2023. Designed as a key trade and infrastructure link, the IMEEC consists of:

• An East Corridor, connecting India to the Gulf.
• A Northern Corridor, linking the Gulf to Europe.
• A railway network supplementing maritime and road transport for efficient goods movement.

The UAE and Saudi Arabia are key partners in this initiative, and the India-UAE Intergovernmental Framework Agreement (IGFA), signed in February 2024, outlines plans for a logistics platform, digital supply chain management, and cargo handling for the IMEEC.

Energy Collaboration: Beyond Oil and Gas

According to the government data, India’s energy ties with the Gulf remain strong, with hydrocarbon trade valued at $71 billion in FY 2023-24.

However, the partnership is expanding beyond the traditional buyer-seller model to include renewable energy collaborations, particularly in solar power and green hydrogen.

Growing Defence and Security Cooperation

The defence partnership between India and Gulf nations has witnessed rapid expansion, encompassing high-level visits, joint exercises, and naval cooperation.

India is actively working with GCC countries on counterterrorism, intelligence sharing, cybersecurity and maritime security, strengthening regional stability.

The Role of the Indian Diaspora

With nearly 9 million Indians residing in the Gulf, the Indian diaspora remains a crucial pillar of bilateral relations.

Recognized for their contribution to the economic development of the region, Indian expatriates play a vital role in sectors such as construction, healthcare, finance and technology.

India-Gulf relations are no longer limited to trade and energy but have evolved into a comprehensive partnership spanning strategic, economic, and cultural dimensions.

With increased diplomatic engagement, investments in critical infrastructure, and expanding defence cooperation, the ties between India and the GCC are poised for sustained growth in the years ahead.

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