India-UAE aim to double trade to $200 billion by 2032; ink deals on LNG, defence, and space

India and the United Arab Emirates (UAE) have embarked on an ambitious journey to significantly deepen their economic and strategic ties, setting a target to double bilateral trade to an impressive $200 billion by 2032. This recent development, marked by crucial agreements in energy, defense, and space, signifies a pivotal moment in the evolving relationship between the two nations.

The background to this robust partnership is rooted in decades of cultural exchange, robust trade, and a large Indian diaspora in the UAE. Historically, the relationship was largely transactional, centered around India's oil imports and the UAE's role as a remittance hub. However, in recent years, particularly since the 2015 visit of Prime Minister Narendra Modi to the UAE, the relationship has been elevated to a 'Comprehensive Strategic Partnership.' This shift was solidified with the signing of the India-UAE Comprehensive Economic Partnership Agreement (CEPA) in February 2022, which came into effect on May 1, 2022. CEPA was a game-changer, aiming to reduce tariffs, boost trade in goods and services, and facilitate investment flows, setting the stage for the current ambitious trade targets. India's 'Look West' policy, aimed at strengthening engagement with the Gulf region, has also been instrumental in fostering this closer relationship.

What precisely happened? The core announcement revolves around the aspirational goal of achieving $200 billion in bilateral trade by 2032. This is a substantial leap from the current trade volumes, which stood at around $85 billion in FY23, making the UAE India's third-largest trading partner. Crucially, specific agreements underline this commitment. A 10-year Liquefied Natural Gas (LNG) supply deal between India's HPCL (Hindustan Petroleum Corporation Limited) and the UAE's ADNOC (Abu Dhabi National Oil Company) was confirmed. This long-term energy agreement is a cornerstone for India's energy security. Beyond energy, cooperation has expanded into critical sectors like defense and space, indicating a multi-faceted approach to strategic integration.

Key stakeholders involved in this monumental push include the Governments of India and the UAE, driving the policy and diplomatic frameworks. On the Indian side, ministries such as External Affairs, Commerce, and Petroleum play crucial roles, alongside public sector undertakings like HPCL. From the UAE, ADNOC, a state-owned oil company, is a major player in the energy deal, alongside various governmental entities. Beyond the state, private sector businesses and investors from both countries are crucial stakeholders, as they will be the primary drivers of increased trade and investment.

This development matters immensely for India. Economically, achieving the $200 billion target will significantly boost India's exports, generate foreign exchange, and potentially create numerous jobs. It will also attract further investments from the UAE, a major global investor. Strategically, the 10-year LNG deal is a direct answer to India's pressing energy security concerns. As one of the world's fastest-growing economies, India's energy demand is skyrocketing. Long-term, stable access to energy resources from a reliable partner like the UAE reduces India's vulnerability to global price fluctuations and supply chain disruptions. Geopolitically, strengthening ties with the UAE enhances India's influence in the crucial West Asian region, which is vital for its economic and security interests. This partnership also complements other regional initiatives like the I2U2 grouping (India, Israel, UAE, USA), further solidifying India's strategic footprint. In defense, cooperation can lead to joint exercises, technology transfer, and co-production, bolstering India's defense capabilities and 'Make in India' initiative. Space cooperation offers avenues for joint research, satellite launches, and application-sharing.

While no specific constitutional article directly mandates such trade targets, the spirit of these agreements aligns with India's constitutional framework. Article 51 of the Indian Constitution, a Directive Principle of State Policy, encourages the promotion of international peace and security, maintenance of just and honorable relations between nations, and fostering respect for international law and treaty obligations. The Union List under the Seventh Schedule (Entry 10: Foreign affairs; Entry 14: Entering into treaties and agreements with foreign countries and implementing of treaties, agreements and conventions with foreign countries) grants the Parliament the exclusive power to legislate on foreign affairs and international agreements, providing the legal basis for such bilateral deals. The CEPA itself is an example of an international agreement entered into by India.

Looking ahead, the future implications are profound. This enhanced partnership could lead to diversification of trade baskets beyond traditional oil and gas, into areas like renewable energy, food security, technology, and financial services. It positions India as a more significant player in global supply chains and strengthens its energy diplomacy. For the UAE, India represents a vast and growing market and a reliable partner in a complex geopolitical landscape. The success of this ambitious trade target could set a precedent for India's engagement with other Gulf Cooperation Council (GCC) countries, potentially leading to a broader regional free trade agreement. This decade of deeper integration is poised to reshape economic and strategic dynamics in the Indo-Pacific region, with India and UAE at its core.