UAE signals a further $25 billion for India as sides push rupee–dirham trade

The brief in 6 cards

1. Context1 / 6

   Two countries that trade a great deal with each other face two practical questions. Where will investment come from? And in which currency will the bills be paid?

   India and the UAE have been working on both. The Joint Task Force meeting in Mumbai on 28 September was the fourteenth round of that work. The Task Force dates from 2013. So this is not a new idea announced at a summit. It is a standing body that meets regularly and works through the problems investors actually face: a tax treatment that is unclear, an approval that is stuck, or a rule that reads differently in each country.

   Think of two neighbours who sign a friendship agreement. Now think of two neighbours who agree to meet on the first Sunday of every month to sort out the shared wall, the drainage and the parking. The second arrangement is less impressive to announce, and it works much better.

   On investment, Mr Goyal said the UAE has given an intent to invest a further $25 billion, with a longer-term goal of $100 billion overall. The sectors named were ports, shipbuilding, space, logistics, Indian start-ups and the Indian stock market.

   The word to hold on to is intent. An intent is a statement of what an investor is thinking of doing. It is not a contract, a transfer of funds, or a project under construction. Some of it turns into investment and some of it does not. The share is never announced.

   On currency, the two sides are working to settle more of their trade directly in rupees and dirhams, instead of converting through US dollars.

   Here is the everyday version. A shopkeeper in Guwahati who buys goods from a supplier in Dubai now pays in dollars. He converts rupees to dollars. The supplier converts dollars to dirhams. Each conversion costs money. If both deal directly in rupees and dirhams, one step and one set of charges disappear.

   Mr Goyal said this now makes up a double-digit share of trade between the two countries. What happens to the balances that build up on either side is the hard part. That comes later in this article.

   The base of the relationship is the Comprehensive Economic Partnership Agreement (CEPA), in force since May 2022. In the four years since, trade between the two has roughly doubled, reaching $101.25 billion in 2025-26.

2. Key highlights2 / 6
   • The meeting. The 14th meeting of the India–UAE High-Level Joint Task Force on Investments was held in Mumbai on 28 September 2026. It was co-chaired by Union Minister of Commerce and Industry Piyush Goyal and Sheikh Hamed bin Zayed Al Nahyan, Managing Director of the Abu Dhabi Investment Authority. The Task Force was set up in 2013. The 13th meeting was held in Abu Dhabi in September 2025.
   • The investment figure. An intent to invest a further $25 billion in the near future, with a longer-term goal of $100 billion. Sectors named: ports, shipbuilding, space, logistics, Indian start-ups and the Indian stock market. This is an intent conveyed by the UAE side and stated by the Minister at a press conference. It is not a signed commitment. Do not treat either figure as committed money, and do not attach a timeline that has not been given.
   • Trade figures. Trade between the two countries reached $101.25 billion in 2025-26 (a financial year). Non-oil trade reached $76.2 billion in 2025 (a calendar year). The stated target is $200 billion by 2032. The two figures cover different periods, so keep each period with its figure.
   • Deals noted at the meeting:
     • Emirates NBD’s purchase of a majority stake in RBL Bank, at about $3 billion
     • International Holding Company’s $1 billion investment in Sammaan Capital
     • A joint investment intent of $11.5 billion for an integrated aluminium complex in Odisha
   • Financial sector. Mashreq Bank, First Abu Dhabi Bank and Abu Dhabi National Insurance Company (ADNIC) are opening branches at GIFT City.
   • Projects reviewed. The Food Park project in Gujarat, and the plan to start an Invest India office in the UAE before the end of 2026.
   • Shipping. Six areas were named for cooperation, and a working group is to be set up. They are ship ownership, development of modern ports, ship manufacturing, ship repair and maintenance, ship breaking, and container manufacturing.
   • Currency and payments. The two sides reviewed central bank cooperation on local-currency settlement, payment messaging systems and digital currencies. Mr Goyal said local-currency trade is a double-digit share and rising.
   • Diplomatic backdrop. Prime Minister Narendra Modi visited the UAE in May 2026. The Crown Prince of Abu Dhabi, Sheikh Khaled bin Mohammed bin Zayed Al Nahyan, visited India in September 2026.
   • Also discussed. Taxation, logistics, market access, trade facilitation, aviation connectivity, and the work of subcommittees under CEPA.
3. Key concepts3 / 6

   1. Comprehensive Economic Partnership Agreement (CEPA)

   A basic free trade agreement (FTA) does one thing. It cuts or removes customs duties on goods traded between the countries.

   A CEPA goes wider. Along with goods, it covers services (who may offer accountancy, legal, healthcare or IT services in the other country), investment (protections and approvals), government purchases, intellectual property, technical standards, rules of origin and the settling of disputes.

   Think of it this way. An FTA is two shopkeepers agreeing to stop charging each other an entry fee. A CEPA also covers who may work in whose shop, whose weights and measures are accepted, whose licences are recognised, and what happens in a dispute.

   Rules of origin need special attention, because this is where most of the difficulty lies. Suppose India gives lower duty to goods from the UAE. Does a good that was only routed through the UAE from a third country qualify? Rules of origin set the test. It is usually a minimum share of value added locally, or a change in the tariff class of the good. Without such rules, an FTA with one country becomes an FTA with the whole world, through that country’s ports.

   The India–UAE CEPA came into force in May 2022.

   2. Sovereign wealth fund

   A sovereign wealth fund is a state-owned investment fund. It puts national wealth into long-term assets abroad. The wealth usually comes from natural resource income or from built-up foreign exchange reserves.

   The reason is simple. A country that earns from oil knows two things. The oil will run out, and its price will not stay steady. So it turns some of today’s income into assets that will give income later, such as infrastructure, shares, property and bonds.

   Think of a family whose income comes from one mango orchard with an uncertain harvest. In each good year it puts some earnings into a fixed deposit and a small shop. The orchard may fail. The shop should not.

   The Abu Dhabi Investment Authority (ADIA) is one of the world’s largest such funds. The UAE co-chair of this Task Force is ADIA’s Managing Director. That shows how the relationship is organised. Investment capital is at the centre of it, not an add-on.

   For India, sovereign wealth funds are good partners for infrastructure, because their time horizon matches the asset. A port or a transmission line takes years to build and decades to pay back. A fund with no pressure to give money back can wait. A fund that answers to quarterly investors cannot.

   3. Local-currency settlement

   Most international trade is priced and paid in US dollars, even when neither side is American. An Indian exporter selling to a UAE buyer is usually paid in dollars and then converts them to rupees.

   Local-currency settlement means the two sides deal directly in their own currencies.

   This generally runs through vostro accounts. A vostro account is an account that a foreign bank keeps with a domestic bank, in the domestic currency. In the Indian system, the Reserve Bank has allowed Special Rupee Vostro Accounts. Through these, a partner country’s bank holds rupees in India. An Indian importer pays rupees into the account. An Indian exporter is paid rupees out of it.

   The stated advantages are these. There are fewer conversions, so costs are lower. There is less exposure to exchange-rate moves against a third currency. And there is less dependence on a payments system that neither side controls.

   The difficulty is explained in the next concept. It is the part most answers leave out.

   One point is special to this pair. The dirham is pegged to the US dollar at a fixed rate. This makes rupee–dirham settlement much simpler than between two freely floating currencies, because the dirham side adds no new volatility. It also means this is a step away from paying in dollars. It is not a step away from the dollar as a unit of value.

   4. Trade settlement balances: the pile-up problem

   This is the idea that decides whether local-currency settlement works. It is easiest to see with a simple case.

   Suppose India imports ₹100 worth of goods from Country X and exports ₹60 worth to it, and all of it is paid in rupees. Country X’s exporters have been paid ₹100. Country X’s importers have paid ₹60. So Country X is left holding ₹40 that it has not spent.

   The question that decides everything is: what does Country X do with the ₹40?

   • If it can buy more Indian goods, the arrangement works.
   • If it can invest the rupees in Indian government securities, company bonds or shares at a return it finds acceptable, the arrangement works.
   • If it can neither spend nor invest them well, it is holding a currency it did not want. It will sooner or later stop accepting rupees.

   Think of a mechanic who is paid in vouchers that can be used only at one grocery shop. If he buys his groceries there anyway, the vouchers are as good as money. If he has more vouchers than groceries he needs, they are a problem, and next time he will ask for cash.

   This is why making a currency international is not just a matter of two governments agreeing. It needs depth in the home financial market, meaning instruments that the other side actually wants to hold. It also needs enough convertibility to let balances move.

   India’s trade with the UAE is large in both directions. That makes the balance problem easier to manage here than in some other two-country arrangements.

   5. Currency internationalisation and “de-dollarisation”

   A currency is international to the extent that people outside the country are willing to use it. They may use it to price trade, to borrow, and to hold as reserves.

   This is a matter of degree, not a yes-or-no state, and no law can create it. It depends on whether foreigners want to hold assets in that currency. That depends in turn on how deep the markets are, how predictable the law is, how open the capital account is, and how stable the economy is.

   People use the word de-dollarisation loosely. In an exam answer, use it with care. Using fewer dollars to settle one two-country trade flow is one thing. Replacing the dollar as the world’s main reserve currency is a different and far bigger matter, and nothing in the India–UAE arrangement does that. When the other currency is itself pegged to the dollar, the point is even clearer.

   Here is a measured way to say it. The aim is to cut middleman costs and reduce dependence on one payments system, in one two-country flow. It is a sensible aim, and a modest one.

   6. GIFT City and IFSC

   Gujarat International Finance Tec-City (GIFT City) hosts India’s first International Financial Services Centre (IFSC). The International Financial Services Centres Authority (IFSCA), a single regulator set up in 2020, regulates it.

   For rules and tax, an IFSC is treated as offshore territory located onshore. Its purpose is to bring back to India the financial business that Indian entities were doing in Singapore, Dubai or London. Examples are rupee derivatives, foreign-currency lending, fund management, and aircraft and ship leasing.

   The opening of branches there by Mashreq Bank, First Abu Dhabi Bank and ADNIC is a small line in a press release. But it matters in substance. An IFSC works only if foreign institutions are present in it.

4. Note4 / 6

   Reading the announcement carefully

   This part is about how to use figures like these in an answer. The habit it teaches is worth more than the figures.

   Intent, commitment and deployment are three different things.

   • An intent is an investor’s stated interest.
   • A commitment is a binding promise, often with conditions.
   • Deployment is money actually moved and spent.

   Announcements usually report the first. Balance of payments data records the third. The gap between them is normal. It is not a sign of bad faith, because investment plans do change with conditions. But an answer that treats an announced intent as investment already made has got a fact wrong.

   Here is the right way to put it in an answer: “the UAE conveyed an intent to invest a further $25 billion, and actual deployment will be seen in later data.”

   Named deals are firmer than round figures. The Emirates NBD–RBL Bank deal at about $3 billion and the International Holding Company–Sammaan Capital investment at about $1 billion are named deals with named parties. The $11.5 billion aluminium complex in Odisha is described as an investment intent. This difference shows in the way the Ministry describes each item, and it should carry into any answer.

   Where the capital comes from, and where it sits. For several years the UAE has ranked among the largest sources of FDI into India by recorded origin. Some capital routed through the UAE really comes from elsewhere, because the UAE is a centre of financial middlemen as well as an exporter of capital. This is an ordinary feature of global finance and not a wrong. But it means “UAE FDI” in official statistics shows the immediate source, not the final owner.

   “Double digits” needs a base. Mr Goyal said local-currency settlement is in double digits. He did not say what it is a share of. It could be all trade between the two countries, non-oil trade, one category, or a value. So do not quote it as a precise percentage of anything.

   Targets show direction. The $200 billion by 2032 target and the $100 billion investment goal are ambitions agreed between governments. They show the direction and the seriousness of the relationship. They are not forecasts, and calling them forecasts in an answer weakens it.

5. Note5 / 6

   Why the Gulf, and why the UAE

   The relationship matters because of four foundations. An answer that names all four is more complete than one built on trade figures alone.

   • Energy. India imports the overwhelming majority of the crude oil it uses, and the Gulf is its main source. Supply security in this region is not a matter of commercial taste. It is a strategic need.
   • Diaspora and remittances. The Indian community in the UAE is among the largest expatriate groups there. The Gulf as a whole is the largest source of remittances to India. Remittances are a large and unusually steady part of India’s current account. They reach households directly, especially in Kerala, Tamil Nadu, Andhra Pradesh, Uttar Pradesh and Bihar.
   • Connectivity. The UAE is a link on the India–Middle East–Europe Economic Corridor (IMEC), announced in 2023. The plan is a rail-and-shipping route that joins India to Europe through the Gulf. The shipping cooperation agreed at this meeting (ports, ship ownership, shipbuilding, repair, container manufacturing) fits that geography. The UAE is also a partner with India, Israel and the United States in the I2U2 grouping.
   • Capital. Gulf sovereign funds hold long-horizon capital, and India needs long-horizon capital for infrastructure. This is a real fit and not a diplomatic phrase. The kind of asset and the kind of investor match.

   A note on balance. Economic partnerships this deep create dependence on both sides. In an answer, it is fair to note that India’s reliance on a single region for energy and remittances is itself a strategic concern. That is why spreading energy sources, and the places where Indian workers go, is a stated policy aim alongside deepening this relationship. Saying both is more accurate than saying either.

6. Way forward6 / 6
   • On investment, put first the sectors where capital brings skill. Ports, logistics, green energy and advanced manufacturing are areas where foreign capital can bring operating know-how and technology, not only money. Money put into the stock market is welcome, but it can leave quickly. Direct investment in a port or an aluminium complex is not like that. The two should not be reported as the same thing, and policy should not treat them as interchangeable.
   • Insist on value added in India and on technology transfer. For an investment in shipbuilding or aluminium, the test is not the headline figure. It is what is built in India, how much of the inputs are sourced at home, and what ability is left when the investment matures. This should be written into contracts, not just hoped for.
   • Keep contracts open to view. Big infrastructure investments by state-owned foreign capital rightly draw scrutiny. Published terms, clear ways to settle disputes and predictable regulation serve both the investor and the public. They also lower the political risk that puts off the next investor.
   • On currency, build the instruments before growing the volume. Local-currency settlement can grow only as far as the other side is willing to hold the currency. That willingness depends on there being something worth holding: deep, liquid rupee instruments, easy custody and reliable hedging. If settlement grows faster than the instruments that absorb balances, the problem is only moved elsewhere.
   • Develop hedging markets. Exporters and importers need to manage currency risk. Where the two-country market is thin, forward cover is dear or not available, and firms go back to dollars for sound business reasons. The limit is how developed the market is, not willingness.
   • Plan the sequence around the dirham’s peg. Because the dirham is pegged to the dollar, this arrangement is technically easier than most. So it is a good place to gain institutional experience, in the plumbing, the messaging and the reconciliation, before the model is used with currencies where exchange-rate risk is real.
   • Link the payments work to UPI and CBDC pilots. The meeting reviewed payment messaging systems and digital currencies along with settlement. Retail payment links and wholesale settlement are different problems, and progress on one does not deliver the other. But a common channel between the two central banks helps both.
   • Track what is realised, not what is announced. The most useful habit in this area is a public record of announced intent against money actually deployed, project by project. It would improve public debate a great deal. And it would make the next announcement more believable, not less.

   The main point is this. Announcements create expectations. Institutions create results. The most important item in this meeting may not be the $25 billion. It may be the fourteenth meeting of a working body that clears the specific obstacles investors actually meet. That is unglamorous, and it is what the figures eventually rest on.

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