The Middle East & Gulf Economies
India and the Gulf: Oil, Workers and Trade
How India and the Gulf states are linked through energy, millions of migrant workers, remittances, trade and investment.
India and the Gulf states are among each other’s most important economic partners. Their ties rest on energy, people, trade and increasingly investment.
Energy
The Gulf supplies a large share of India’s crude oil and natural gas imports. Saudi Arabia, Iraq and the UAE have long been among India’s top oil suppliers, and Qatar is a major source of liquefied natural gas. Energy prices in the Gulf therefore directly affect Indian inflation, the trade deficit and the rupee.
People and remittances
Around 9 million Indians live and work in the Gulf countries, the largest diaspora group in the region. India is the world’s largest recipient of remittances, and a significant share has historically come from the Gulf, though the share from advanced economies like the United States and United Kingdom has grown. Kerala’s economy was transformed by Gulf remittances from the 1970s onward.
Trade and investment
The UAE is one of India’s largest trading partners. In 2022, India and the UAE signed a Comprehensive Economic Partnership Agreement, cutting tariffs on most goods traded between them. Gulf sovereign funds and companies have invested in Indian businesses and infrastructure, while Indian firms operate widely in the Gulf.
In 2023, India, the UAE, Saudi Arabia, the European Union and others announced plans for an India-Middle East-Europe Economic Corridor, linking India to Europe through Gulf ports and railways.
Payments
India and the UAE have developed arrangements to settle some trade in rupees and dirhams, and to link payment systems, allowing UPI to be used in the UAE.
A plumber from Kerala working in Dubai sends part of his wages home each month through a transfer app. His family uses the money for school fees, a new roof and savings. Multiply this by millions of workers, and remittances become a major source of foreign currency for India and income for many villages.
Energy matters, but people, trade, investment and payments now link India and the Gulf as much as oil does. The relationship has broadened into a wide economic partnership.
- The Gulf supplies much of India's oil and gas.
- Around 9 million Indians live in the Gulf, sending large remittances home.
- The 2022 India-UAE trade agreement cut tariffs, and Gulf funds invest in India.
- New projects like IMEC and payment links deepen the partnership.
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