India–UAE trade hits $100 billion, but non-oil momentum slows

India–UAE trade hits $100 billion, but non-oil momentum slows

India’s trade corridor with the United Arab Emirates (UAE) has crossed a landmark, touching $100 billion in FY25. Yet beneath the headline number lies a more subdued picture: the non-oil, non-gems segment that New Delhi wants to power the next leg of growth has been losing momentum.

Commerce Minister Piyush Goyal, co-chairing the 13th India–UAE High-Level Task Force on Investments (HLTFI) in Abu Dhabi on September 18, set out a fresh benchmark. “We have set a new target to double bilateral trade in non-oil and non-precious metals to $100 billion in the next 3–4 years,” he said. The push builds on the comprehensive partnership agreement signed in 2022.

A Tale of Two Tracks

Overall trade volumes have ballooned from $59.1 billion in FY20 to $100 billion in FY25, lifting the UAE’s share of India’s global trade from 7.5% to 8.6%. But the “clean” basket—excluding oil and jewellery—has grown more modestly, from $19.9 billion in FY20 to $32.9 billion in FY25. Its share has stayed flat at around a third of the total.

The drag has been sharper in recent years. After a strong rebound post-pandemic ($25.5 billion in FY22), growth cooled, with exports inching up from $29.6 billion in FY24 to $32.9 billion in FY25—rising, but far from surging.

Pressure Points and Bright Spots

The record $26.8 billion trade deficit underscores the weight of energy imports. Still, non-oil categories reveal nuance. Machinery and electrical goods exports to the UAE rose to $5.6 billion in FY25, while vehicles and aircraft parts also showed strength. Apparel exports, however, remain subdued, and chemicals have cooled after an earlier spike.

Why It Matters

The UAE could emerge as a vital safety valve for Indian exporters squeezed by US tariffs. Moneycontrol analysis suggests at least $15.6 billion of US-bound trade could be re-routed to the UAE. Machinery, air conditioners, mechanical products, and footwear are all candidates for diversion.

Even in routers, modems, and switches, where the US took only 19% of India’s $172 million exports, the UAE’s own imports of $2.5 billion present scope for realignment.