India, UAE Trade Pact Helps Boost Bilateral Trade to Cross $100 Billion: Goyal

Why It Matters

The milestone underscores the CEPA’s role as a catalyst for deeper economic integration between India and the Gulf, while the shifting trade balance and FDI dip signal areas for policy fine‑tuning.

Key Takeaways

• India-UAE trade surpasses $100 billion for first time.
• CEPA drives growth in gems, engineering, electronics, agriculture.
• India's exports to UAE rose 2% to $37.36 billion in 2025‑26.
• Trade deficit widened to $26.53 billion despite higher exports.
• UAE FDI to India fell 44% to $2.45 billion in 2025‑26.

Pulse Analysis

The Comprehensive Economic Partnership Agreement (CEPA) signed in 2022 positioned the United Arab Emirates as a strategic gateway for India into Africa, the broader Gulf Cooperation Council, the CIS and select European markets. By eliminating tariffs on a wide range of goods and easing services regulations, the pact has accelerated cross‑border supply chains, especially in high‑value sectors such as gems, jewellery and engineering components. Analysts view the agreement as a template for India’s broader push to diversify export destinations beyond traditional Asian partners.

In fiscal 2025‑26, bilateral merchandise trade topped $101 billion, with Indian exports to the UAE climbing 2% to $37.36 billion. The surge reflects robust demand for Indian agricultural produce, electronics and specialised engineering goods. However, the trade deficit expanded to $26.53 billion as imports of oil‑related products and consumer electronics outpaced export growth. Meanwhile, UAE‑origin foreign direct investment slipped 44% to $2.45 billion, suggesting that while trade volumes are rising, capital flows are more sensitive to global risk sentiment and regional geopolitical shifts.

Looking ahead, policymakers are likely to calibrate tariff schedules and investment incentives to address the widening deficit and revive FDI momentum. Strengthening services trade—particularly in finance, logistics and digital platforms—could offset merchandise imbalances. For investors, the CEPA’s success signals a fertile environment for companies targeting the Middle‑East and African corridors, while also highlighting the need to monitor commodity price volatility and regulatory adjustments that could reshape the India‑UAE economic landscape.