September 24, 2025
5 mins read

India and UAE: Beyond Oil, Towards a New Economic Compact

By Soniya Kirpalani

Shri Piyush Goyal’s recent two-day whirlwind visit to the United Arab Emirates was not just another trade mission. It was a signal – that India and the UAE are reshaping their partnership in ways that go far beyond traditional commerce. In the minister’s words – “We have reset our targets… convinced that the relationship is poised for another big leap” – offer a roadmap to how India and the Gulf could redefine economic ties in an era of shifting global alignments.

It has been a while that India-UAE corridor was established and both partners have already proven that when political will and business pragmatism converge, results follow quickly. The Comprehensive Economic Partnership Agreement (CEPA), signed in 2022, nearly doubled bilateral merchandise trade within two years. Now, Goyal has placed a bolder marker: $100 billion in non-oil, non-gold trade within 3–4 years. This is more than a trade statistic; it reflects the UAE’s growing confidence in India as the world’s fastest-growing large economy, and India’s trust in the UAE’s role as a capital-rich, globally connected hub.

So, what makes this target credible is the structural shift both economies are undergoing. India needs massive foreign investment in infrastructure, technology, and green energy. The UAE needs secure food corridors, skilled human capital, and reliable trade partners beyond hydrocarbons. Together, the pieces fit.

Bharat Mart and the MSME Revolution:

Perhaps the most transformative initiative unveiled is Bharat Mart, a permanent exhibition and warehousing hub for Indian goods in Dubai’s Jebel Ali Free Zone. It is, in effect, a Dragon Mart for India. Over 9,000 companies have already expressed interest, and once operational by 2027, it will give Indian MSMEs – from textile weavers to fintech startups – a launchpad to Africa, the Middle East, and Europe. For decades, India’s small enterprises struggled to internationalize. Bharat Mart promises to change that, turning the UAE into India’s extended marketplace. This isn’t charity – it is strategic. The UAE gains diversified supply chains and a stronger role as a re-export hub; India gains scale for its MSMEs and a chance to turn small exporters into global brands.

Technology: Where AI Meets Oil Wealth:

In a world obsessed with artificial intelligence, the UAE has quietly positioned itself as a serious contender – not just a consumer of technology, but as an investor and incubator. Piyush Goyal’s meeting with Mr. Peng Xiao of G42, the Abu Dhabi-based AI powerhouse, underscores this. “We could be looking at serious collaborations in technology sectors,” the minister said, pointing to genomics, AI, and data centers.

This matters because India produces talent, but often loses it to the West. The UAE has capital and vision, but needs scale and skill. Together, they could create a new AI corridor – one where Bangalore engineers and Abu Dhabi investors co-develop the tools of tomorrow. In many ways, it’s a partnership designed to fill the vacuum left by a more inward-looking Silicon Valley.

Video: Santosh Rai

Bilateral Talent Share Opportunity:

The tightening of U.S. immigration and the new H1B visa taxation will slow the flow of Indian talent. This creates opportunity in the GCC States, especially UAE, which is already a magnet for Indian skilled workers. UAE is focused in diversification, developing sectors in AI, green energy, fintech, healthcare and logistics. These economies need millions of engineers, data scientists, healthcare professionals, and skilled technicians – exactly the demographic India produces in abundance. By creating bilateral job corridors, talent visas, and co-owned innovation hubs, the Gulf can not only fill its own human capital gap and create talent mobility= a central pillar of the India–UAE growth story.

Food Security and Gujarat’s Food Park:

Food security is another anchor. The UAE imports nearly 90% of its food. India, one of the world’s largest producers, has agreed to develop a food corridor, starting with a food park in Gujarat. Backed by a $2 billion Emirati commitment, this project will secure supplies for the Gulf while creating jobs for Indian farmers and youth. Goyal called it “a mission mode project” – and if implemented well, it will symbolize the shift from transactional trade to symbiotic resilience.

Healthcare: A Hospital for the Diaspora

Perhaps the most human story to emerge from this visit is the India–UAE Friendship Hospital being set up in Dubai. Dedicated to Indian expatriate workers, many of whom cannot afford high-quality care, the hospital is funded by philanthropists with land support from the UAE. “It will provide high-quality healthcare, particularly for workers from humble backgrounds,” Goyal confirmed. In this gesture lies the essence of people-to-people diplomacy: economic growth must trickle down to dignity for workers.

Geopolitics: The IMEC Factor:

Zoom out, and the economic story has geopolitical undertones. The India–Middle East–Europe Economic Corridor (IMEC), launched at the G20 in New Delhi, is more than a transport plan. It is a bet on a multipolar world where Gulf ports, Indian talent, and European markets are seamlessly linked. Goyal admitted that the UAE is already aligning its infrastructure to plug into IMEC. If successful, this corridor could rival other trade blocs and cement India–UAE as co-architects of a new economic geography.

The Road Ahead:

The narrative of India–UAE ties has matured. It is no longer about oil barrels and remittances. It is about AI and MSMEs, food and healthcare, talent and infrastructure. As Goyal put it: “The partnership stands on the pillars of innovation, investment and sustainable development.”

The challenge now is execution. Targets must translate into trade flows, memoranda into manufacturing, and MOUs into jobs. If Bharat Mart opens on schedule, if the Gujarat food park delivers value, if AI collaborations produce real products, then the $100 billion target will look modest.

In a world of fragile supply chains and contested trade routes, India and the UAE are betting on something rare – trust and shared growth. If they succeed, the partnership could well become the template for Asia–Gulf cooperation in the 21st century.

Previous Story

Phalke For Lal: A Fitting Crown for a Four Decade Reign

Next Story

GST Reform Fuels Auto Boom

Previous Story

Phalke For Lal: A Fitting Crown for a Four Decade Reign

Next Story

GST Reform Fuels Auto Boom

Latest from -Top News

Pakistan Risks Overstretching Itself in Yemen War

Pakistan’s expanding military role in Saudi Arabia amid the Yemen conflict could strain its defence resources and fragile finances…reports Asian Lite News Desk Pakistan’s military involvement in the war in Yemen may prove unsustainable because of mounting financial pressures and competing security demands, according to a new report. Islamabad’s growing military presence in Saudi Arabia risks stretching its defence resources while exposing the country to greater strategic and economic challenges. An article by Andrew Wilson in One World Outlook describes Pakistan’s involvement as a case of “fiscal and strategic overreach”, arguing that the country lacks the financial flexibility to sustain an expanded military commitment. Pakistan’s external finances depend heavily on an International Monetary Fund (IMF) programme, financial support from Gulf countries and remittances from Pakistani workers in the region. The report argues that deeper military involvement in the conflict could place additional pressure on these sources of financial stability. It also warns that deploying troops and military equipment abroad could weaken Pakistan’s capacity to address security challenges along its eastern border and deal with two domestic insurgencies. The move could also draw Islamabad into a conflict it has sought to approach cautiously. A Reuters report in May, citing Pakistani security and government sources, said Islamabad had deployed around 8,000 troops, a squadron of approximately 16 aircraft, mostly JF-17 fighter jets, two drone squadrons and a Chinese HQ-9 air-defence battery to Saudi Arabia. According to those sources, Riyadh was financing the deployment, with Pakistani personnel operating the equipment. The sources also said a confidential agreement contemplated the possibility of deploying up to 80,000 troops. Islamabad has not confirmed those figures, although it has acknowledged its military presence in Saudi Arabia, including the deployment of fighter jets at King Abdulaziz Air Base from April. The One World Outlook article argues that Saudi financial support can cover allowances and operating expenses but cannot easily replace military equipment needed elsewhere or resolve the political and strategic challenges of participating in the Yemen conflict. Pakistan’s defence budget is another concern. For the 2026-27 financial year, the federal government allocated PKR 3 trillion, or approximately $10.8 billion, to defence services. The allocation represents an 18 per cent increase from the original PKR 2.55 trillion provision and amounts to around 2.1 per cent of projected gross domestic product (GDP). Defence spending accounts for approximately 16 per cent of the federal government’s PKR 18.8 trillion expenditure. Military pensions are budgeted separately at PKR 822 billion, while debt servicing costs stand at approximately PKR 8 trillion, more than two-and-a-half times the defence allocation. The report argues that these competing financial obligations leave little room for additional military expenditure without placing further pressure on public finances. Pakistan’s reliance on IMF assistance also limits its fiscal flexibility. The country must meet the conditions attached to the programme, including a primary budget surplus target of 2 per cent of GDP and continued restraint on development spending. According to the article, these requirements make it difficult for Islamabad to finance an additional military commitment without compromising other budgetary priorities. Pakistan’s economic indicators offer limited reassurance. Economic growth for the 2025-26 financial year is estimated at between 3.6 and 3.7 per cent, while inflation reached approximately 10.3 per cent in September following an energy price shock. Foreign exchange reserves stood at around $21.5 billion at the end of September. Although this marks an improvement from the low levels recorded in 2023, the report notes that the reserves cover only a few months of imports. Financial assistance from Gulf partners remains central to Pakistan’s external stability. The article says Islamabad holds approximately $8 billion in Saudi deposits at its central bank. In July, the State Bank of Pakistan said Riyadh had extended the maturity of $5 billion in deposits to December 2028, easing the country’s immediate external financing requirements. A further $3 billion deposit was also extended in the spring. However, the article argues that these arrangements provide temporary relief rather than long-term financial independence, particularly as regional conflict threatens the stability of the Gulf economies on which Pakistan relies. The report concludes that Pakistan faces a difficult balance between supporting Saudi Arabia militarily and preserving the financial and military resources needed to address its domestic and regional challenges.
Go toTop