India-Middle East Relations: History, Trade, and Strategic Ties

The India-Middle East Economic Corridor (IMEC) holds strategic importance for India, reflecting its growing influence in West Asia. However, the Israel-Gaza conflict has delayed its progress, raising concerns about its future trajectory.

The India-Middle East-Europe Economic Corridor (IMEC), unveiled at the G-20 Summit 2023, underscores India's expanding influence in West Asia. Despite strong support from partners like Greece, which calls it a "project for peace," the Israel-Gaza conflict has stalled progress. More than a trade route, IMEC symbolizes India’s push for deeper economic and diplomatic ties while reshaping global supply chains.

Energy Security and Economic Stability

• India’s crude oil imports from the Middle East rose from 51% (Dec 2024) to 53.89% (Jan 2025), reinforcing the region’s role in India’s energy security.
• A 2023 MoU with the UAE aims to develop green hydrogen and an undersea cable under the ‘One Sun, One World, One Grid’ initiative.
• In Feb 2024, India extended its LNG deal with Qatar until 2048, securing 7.5 million tonnes annually for long-term energy stability.

Trade, Investment, and Economic Corridors

• India-GCC bilateral trade reached USD 161.59 billion in FY 2023-24, cementing the Middle East as a key economic partner.
• FTAs and economic corridors, including IMEC, aim to enhance trade connectivity and lower costs.
• The UAE ranks as India’s third-largest trading partner and second-largest export destination, with exports exceeding $35.62 billion (FY 2023-24).

Remittances and Workforce Contributions

• The Middle East hosts millions of Indian expatriates, whose remittances bolster India’s forex reserves and economy.
• Over 66% of India’s 1.34 crore NRIs reside in the UAE, Saudi Arabia, Kuwait, Qatar, Oman, and Bahrain.
• India received $111 billion in remittances (2022), the highest globally, with the Gulf region as the largest contributor.
• Saudi Arabia’s Nitaqat labor reforms have led India to seek favorable migration policies.

Energy Price Volatility and Supply Disruptions

• India’s heavy reliance on Middle Eastern oil makes it vulnerable to price fluctuations and geopolitical instability.
• Houthi attacks in the Red Sea (2023-24) and OPEC+ production cuts have disrupted supply chains and increased import costs.
• OPEC+ nations cut oil production by 2.2 million barrels/day (Q1 2024), raising global oil prices and impacting India’s energy security.

Geopolitical Instability and Regional Conflicts

• Ongoing conflicts in Israel-Palestine, Yemen, and Saudi-Iran tensions create diplomatic hurdles for India.
• Maintaining neutrality in the Israel-Gaza conflict while balancing ties with Iran and Saudi Arabia remains challenging.
• The IMEC project faces delays due to the conflict, impacting India’s regional trade strategy.

Trade Barriers and Delayed Economic Agreements

• The absence of an India-GCC Free Trade Agreement (FTA) limits economic potential despite strong trade ties.
• Regulatory hurdles, tariff barriers, and labor laws restrict business expansion.
• While CEPA (2022) boosted India-UAE trade, negotiations for an India-GCC FTA remain slow.

Enhancing Energy Partnerships through Co-Development

• India should transition from a passive importer to an active co-investor in Middle Eastern energy infrastructure.
• Joint ventures in renewables, hydrogen, and oil refining will ensure long-term energy security.
• Saudi Aramco’s stake in the $44 billion Ratnagiri refinery could cement long-term ties.

Expanding Trade and Economic Integration Beyond Oil

• Diversification into manufacturing, IT, space technology, and defense exports will strengthen economic ties.
• Finalizing the India-GCC FTA will boost trade and investment flows by removing barriers.
• Fast-tracking the India-Middle East-Europe Economic Corridor (IMEC) will integrate India into global supply chains.

Co-Development in Defense and Security Cooperation

• Moving from arms sales to joint defense production will deepen security ties.
• Establishing defense tech parks in UAE and Saudi Arabia will integrate supply chains and reduce reliance on Western firms.
• Strengthening intelligence-sharing networks and anti-terror frameworks will enhance regional security.

Strengthening Food and Water Security via Agri-Tech Cooperation

• Co-developing agricultural tech parks in the Middle East will enhance food security and boost Indian agri-tech exports.
• Collaboration in desalination, hydroponics, and smart irrigation will make Gulf nations less reliant on imports.
• Expanding the India-Middle East Food Corridor will enable joint research and innovation in food and water security.

Institutionalizing Migration Frameworks for Skilled Workforce

• Upskilling Indian workers and signing labor mobility agreements will shift migration toward high-skilled sectors like healthcare, AI, and engineering.
• Setting up vocational training centers in Gulf nations will improve wages and working conditions.
• Expanding the Pravasi Bharatiya Bima Yojana (PBBY) will provide better insurance coverage for Indian workers abroad.

The India-middle east relations have evolved into a multi-dimensional partnership spanning trade, connectivity, defense, and cultural diplomacy. To fully leverage this relationship, India must fast-track infrastructure projects, finalize trade agreements, and deepen security cooperation while maintaining its strategic autonomy.

Why is the Middle East important to India?

The Middle East is crucial for India due to energy security, trade, and strategic partnerships. It supplies a significant portion of India’s crude oil and natural gas, serves as a major trade hub, and hosts millions of Indian expatriates who contribute through remittances.

Why there is so much Indian diaspora in the Middle East?

The Indian diaspora in the Middle East is large due to historical trade ties, employment opportunities, and geographic proximity. Millions of Indians migrated to work in sectors such as construction, healthcare, IT, and services, benefiting from strong labor demand in Gulf countries. Favorable migration policies and economic cooperation further support this workforce movement.

What countries are in the Middle East? 

The Middle East includes countries such as Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, Oman, Iran, Iraq, Israel, Jordan, Lebanon, Syria, Yemen, Egypt, and Turkey. The region is strategically located, connecting Asia, Africa, and Europe.

What is the largest country in the Middle East?

Saudi Arabia is the largest country in the Middle East by land area, covering approximately 2.15 million square kilometers. It plays a key role in regional geopolitics, global oil markets, and Islamic heritage as the custodians of Mecca and Medina.

1. The area known as ‘Golan Heights’ sometimes appears in the news in the context of the events related to: (UPSC Prelims 2015)

A. Central Asia

B. Middle East
  C. South-East Asia
  D. Central Africa

2. Which of the following is not a member of ‘Gulf Cooperation Council’? (UPSC Prelims 2016)

A. Iran

B. Saudi Arabia

C. Oman

D. Kuwait

The question of India’s Energy Security constitutes the most important part of India’s economic progress. Analyze India’s energy policy cooperation with West Asian Countries. (UPSC Mains 2017)