How India-UAE connectivity can drive growth in a deglobalizing world
27 February 2025
As talk of tariffs and trade wars rocks stock markets around the world, the strengthening of connections between India and the Middle East stands out as a rare beacon of opportunity for growth-focused investors.
Dubai International Airport, the world’s busiest for international travel, welcomed a record 92.3 million passengers in 2024, with Indian routes dominating traffic numbers.[1] Dubai Tourism CEO Issam Kazim even joked that Dubai is an Indian city at an industry forum last year.[2]
Visitor numbers are just one example of the deepening economic relationship between India and the United Arab Emirates (UAE). In May 2022, India and the UAE signed the Comprehensive Economic Partnership Agreement (CEPA), which reduced tariffs on most goods.[3] Two-way trade increased to US$84.5 billion in 2023/24, up 16% from the previous 12 months. India is now the UAE’s second-largest trading partner, and the UAE India’s third largest.[4]
Capital and investment is also flowing between the two nations.
Lured by India’s healthy demographic dividend – the median age is just 29.8[5] – and the scale of the opportunity, investment firms and conglomerates from the Middle East are investing heavily in sectors including consumer, real estate, infrastructure and energy.
In 2023, Abu Dhabi Investment Authority (ADIA), the UAE’s largest sovereign wealth fund (SWF), invested US$500 million in eyewear retailer Lenskart. The following year, ADIA set up a US$4 billion fund to invest further. Several sovereign wealth funds from the Middle East have invested in highways and other infrastructure.
In the opposite direction, Indian entrepreneurs are building on their successes in the UAE and benefiting from the expansion of the Emirates’ capital markets. The US$1.72 billion IPO of Lulu Retail in 2024 is a recent example.[6] Indian investors are the largest foreign owners of real estate in the UAE, with investments valued at around US$30 billion.[7]
A new East-West corridor
The improving bilateral relationship, however, could be just the harbinger of a far bigger opportunity as trade and logistics networks develop further.
With the Middle East at a natural crossroads between Europe and Asia, an increase in trade along the India-Middle East-Europe Economic Corridor (IMEC) could have big benefits for Indian exporters. Conceived as an alternative route for northbound trade with the West, the IMEC will carry goods through UAE ports and across Saudi Arabia by rail to the Mediterranean and onwards into Europe.[8]
Notably, this route will allow global trade to bypass the Suez Canal, helping shore up supply chains against any disruption caused by geopolitical instability in the Red Sea. In November 2023, repeated attacks on ships by Houthi militants led to a rerouting of trading vessels around South Africa’s Cape of Good Hope, adding an additional week to sailing times and thousands of dollars to fuel costs.
India and the UAE signed an initial agreement in February 2024, and companies are already making major investments in line with the long-term vision.
DP World, a Dubai-headquartered global supply chain solutions firm, is preparing to open Bharat Mart, a new mega-distribution center for Indian goods in Dubai, in 2026. Rizwan Soomar, CEO and Managing Director (Middle East, North Africa, Indian Subcontinent) at DP World, says the project will help connect Indian businesses with over 3.5 billion consumers in Europe, Africa and the Middle East. India’s Adani Group, meanwhile, completed the purchase of Haifa Port in northern Israel for 4 billion shekels (US$1.15 billion) in February 2023.[9]
Securities-backed financing can help long-term investors unlock liquidity to invest in this trend or manage their existing exposure. Access to this alternative source of funding may be particularly compelling for shareholders looking to navigate the current period of volatility in Indian markets, with the rupee sliding to a record low against the US dollar and the equity market cooling after years of outperformance. The currency in February weakened to almost 88 rupees to the dollar, weighed down by slowing economic growth and persistent outflows from foreign investors.[10] January marked a four-month losing streak for Indian equities, the longest in over 23 years.[11]
The potential for trade growth between the UAE and India, the need to diversify the economic base of Middle Eastern economies and India’s focus on labor-intensive growth will create a range of opportunities for investors looking to profit from the next chapter of globalization. Flexible financing can be a compelling funding solution for long-term shareholders with an eye on this tremendous potential.
[1] https://www.thenationalnews.com/business/aviation/2025/01/30/dubai-airports-passenger-traffic-hits-record-92-million-in-2024/
[2] https://skift.com/2024/03/20/dubai-tourism-ceo-on-the-power-of-bollywood-indian-visas-and-cricket/
[3] https://www.moec.gov.ae/en/cepa_india
[4] https://www.ibef.org/indian-exports/india-uae-trade
[5] https://www.cia.gov/the-world-factbook/field/median-age/country-comparison/
[6] https://www.bloomberg.com/news/articles/2024-11-09/billionaire-yusuff-ali-s-lulu-ipo-spotlights-uae-s-india-born-tycoons
[7] https://www.damacproperties.com/en/blog/twelve-reasons-why-indians-should-buy-property-in-dubai
[8] https://www.orfonline.org/public/uploads/posts/pdf/20240409183803.pdf
[9] https://www.reuters.com/markets/commodities/adani-led-group-completes-purchase-israels-haifa-port-2023-01-10/
[10] https://www.livemint.com/market/stock-market-news/rupee-opens-at-record-low-of-87-92-against-us-dollar-as-asian-currencies-slip-on-donald-trump-s-new-tariff-plan-11739158633177.html
[11] https://www.reuters.com/markets/asia/s-indian-stocks-set-longest-monthly-losing-streak-over-23-years-2025-01-28/
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