India and the United Arab Emirates have moved further down the path of a strategic relationship with the signing of a $3 billion liquefied natural gas (LNG) energy deal that came on the heels of a commitment from both the Indian and UAE governments to very significant future trade and defense partnerships. The signing of this energy contract came on a visit of just two hours in duration by UAE President Sheikh Mohammed bin Zayed Al Nahyan that he made to India’s capital of New Delhi.
In a world of international energy volatility, rising great-power rivalry, and shifting bloc constructs in West Asia, such an agreement draws attention to the attempt by India to secure energy diversification as well as the UAE’s positioning as a key energy and security partner within the context of Asia’s fastest-growing major economy.
Energy Security at the Core of the Partnership
According to the agreement, Abu Dhabi’s public gas entity ADNOC Gas will deliver a total of 0.5 million tons of LNG to HPCL in India for 10 years. Though it’s a small portion of India’s total import of natural gas in terms of quantity—India imported about 26 million tons of gas in 2024—it’s an assurance in terms of long-term access to gas amid fluctuating spot market gas prices in international markets impacted by geopolitical tensions and demand from Europe and East Asia.
Today, India is the fourth-largest LNG-importing country in the world, but it is set to grow significantly as the Indian government is promoting gas as the “transition fuel” alternative to coal. The government plans to double its gas usage from the present 6 percent to reach 15 percent of its total energy mix by 2030. Such term contracts as the one signed between ADNOC and the Indian government are essential to safeguard the country from gas price volatilities like those from the Russia-Ukraine conflict.
For the UAE, the agreement reinforces its ambition to expand LNG exports beyond traditional markets. ADNOC Gas said the deal pushes the total value of its contracts with India to over $20 billion, reflecting India’s emergence as its largest LNG customer. This aligns with the UAE’s broader strategy to monetize its gas reserves while diversifying its economy away from crude oil dependence.
Trade Ambitions: From $85 Billion to $200 Billion
Apart from energy, they decided to increase bilateral trade by doubling it to $200 billion in six years. The present non-oil bilateral trade between India and the UAE already touches $85 billion, and it comes third in India’s list of bilateral trade after only the United States and China.
The Comprehensive Economic Partnership Agreement (CEPA), signed in 2022, is at the forefront of promoting trade and minimizing tariffs for over 80 percent of goods and facilitating market entry for services. Since CEPA, bilateral non-oil trade has registered above 20 percent growth every year, led by segments such as gems and jewelry, pharma, food, and engineering goods.
The new pledge suggests that both sides see untapped potential, particularly in digital trade, renewable energy, logistics, and advanced manufacturing. The UAE has also emerged as a major source of foreign direct investment into India, with cumulative investments exceeding $18 billion, while Indian companies have invested heavily in UAE infrastructure, ports, and retail.
Defence Cooperation and Strategic Signalling
More geopolitically noteworthy, perhaps, was the fact that a letter of intent for a strategic defense partnership was inked. This, as yet, lacks definition, but in any case marks an obvious and portentous escalation in security relationship that has already deepened in such areas as joint military exercises, defense training, and sharing intelligence.
The timing is intriguing. India’s arch-rival, Pakistan, signed a joint defense pact with Saudi Arabia last year, while there have been recent developments on Islamabad’s part to form a trilateral defense policy with Turkey and Saudi Arabia. In this scenario, it seems that the increasing defense cooperation between India and UAE is a way for it to hedge by building its defense presence in the Gulf region without necessarily taking sides with any of the blocs.
Indian officials were quick to stress that the defence partnership does not imply involvement in Middle Eastern conflicts. However, in practical terms, closer defence ties enhance India’s ability to protect its interests in a region that hosts over 8.5 million Indian expatriates and supplies more than 60 percent of India’s crude oil imports.
Navigating Gulf Rivalries and Regional Fractures
The India-UAE partnership is also a reflection of what is happening in this Gulf itself. Saudi Arabia and the UAE were always quite aligned in their policies, but now it appears that there is divergence on everything from Yemen policy to OPEC+’s oil production strategy. The increasing engagement of India with both countries is clearly an expression of multi-alignment policy vis-à-vis international politics.
The government of New Delhi has adopted this same policy in forums such as I2U2 (India, Israel, UAE, & USA), which aims at cooperation in economic and technological issues, not security. The gas deal and defense letter of intent are perfect examples of this policy.
A Transactional Yet Strategic Partnership
Critically, the brevity of Sheikh Mohammed’s visit highlights how institutionalized and transactional the India–UAE relationship has become. Major agreements are now concluded with minimal diplomatic ceremony, reflecting high levels of trust and policy alignment at the leadership level.
Yet challenges remain. The ambitious $200 billion trade target will require sustained reforms, infrastructure upgrades, and smoother regulatory coordination. On defence, translating intent into concrete cooperation—such as joint production, arms sales, or basing arrangements—will test political sensitivities on both sides.
