India’s expanding influence in the Middle East is among the most defining indicators of the region’s shift into a multipolar era. While New Delhi continues to benefit from its alignment with U.S.-anchored frameworks in the region, it is increasingly leveraging these networks to simultaneously advance its own national interests and economic inroads.

The administration of former President Joe Biden perceived India as a counterbalance to Chinese influence in the Middle East. As a result, it championed New Delhi’s participation in strategic and economic frameworks such as the I2U2 grouping comprising Israel, India, the United Arab Emirates and the United States, which was established in October 2021, and the India-Middle East-Europe Economic Corridor, or IMEC, launched in September 2023.

So far, both frameworks have received fresh endorsement from Washington under U.S. President Donald Trump. During Indian Prime Minister Narendra Modi’s visit to Washington in mid-February, for instance, Trump lauded IMEC as “one of the greatest trade routes in history.” So while India is facing the same pressure as many traditional U.S. allies when it comes to tariffs, for now it currently seems to be benefiting from the Trump administration’s reassessment of those alliances’ strategic value.

Yet New Delhi is now seeking to piggy-back off of these U.S.-anchored networks to deepen bilateral ties and pursue an autonomous foreign policy in the region.

The Gulf states in particular have been vital for India’s inroads into the Middle East and further afield. First, the region remains a crucial source of oil for India, and ties with the Gulf Cooperation Council, or GCC, are essential for guaranteeing its energy security. Second, the nearly 9 million Indian expatriates working in the Gulf not only constitute over a third of India’s annual remittances, but act as an entry point for broader bilateral economic ties. 

Under Modi, however, India has sought to write a new chapter in its regional engagement, seeking bilateral investment from its Gulf partners. This has coincided with India’s own soaring economic growth, which has seen it become a major exporter to the region of goods such as refined fuels, food products, jewelry and precious stones, machinery and textiles.

Reflecting this deepening engagement, India has begun to diversify its growing ties with Qatar, which once centered around gas. On Feb. 18, the two countries elevated their relationship to a Strategic Partnership, signing five memoranda of understanding covering investment, trade and energy. Doha committed to investing $10 billion in India across sectors such as infrastructure and manufacturing, while the two sides set their five-year target for bilateral trade at $28 billion, or double the current value.

---

India’s pursuit of non-dollar trade and bilateral infrastructure investment with its Middle Eastern partners signals its desire to pursue frameworks of cooperation that aren’t confined to Washington’s orbit.

---

In addition to cementing its ties with Doha, New Delhi has also looked to boost engagement with the UAE, which has served as a central economic partner for India. Since both countries implemented their Comprehensive Economic Partnership Agreement—India’s first such comprehensive trade agreement—in May 2022, bilateral trade has nearly doubled from $43.3 billion in 2020-2021 to $83.7 billion in 2023-2024.

Beyond increasing bilateral trade, India has explored non-dollar trade with both the UAE and Qatar, using their own currencies as alternatives for financial settlements. Following their trade agreement, for instance, New Delhi and Abu Dhabi have increasingly facilitated both non-oil trade and crude oil transactions in the Indian rupee and Emirati dirham. While still covering just a fraction of their total trade, this has already set a precedent in the region. Indeed, Qatar has also agreed to explore trade in the rupee and the Qatari riyal, including for Indian purchases of Qatari liquefied natural gas.

It could very well act as a harbinger of more non-dollar trade in the future, particularly should the Indian economy continue to grow while further deepening its trade ties with the Middle East. This underscores how India is forging an independent economic path, in line with the Arab Gulf states’ desire to diversify their partnerships, even if these initiatives don’t currently threaten the dollar’s hegemony, especially with regard to the petrodollar’s status.  

Moreover, as a testament to New Delhi’s alignment with Washington, India has still largely anchored its regional engagement within the U.S.-led regional order. Alongside its inroads in the Gulf, it has deepened ties with Israel, particularly following the U.S.-brokered Abraham Accords in 2020, which saw Israel normalize ties with the UAE and Bahrain, among others. After years in which Modi had been shifting India’s posture toward a closer but tacit alignment with Israel, these agreements enabled India to openly support Israel without concerns about harming relations with Arab states. Those concerns had previously served as a brake on India’s engagement with Israel.

Ideologically, India, Israel and the Gulf states also find some alignment on regional concerns, particularly in their shared opposition to political Islam and the Muslim Brotherhood. This adds another layer of cohesion to their partnership beyond U.S.-led initiatives such as I2U2, as well as further incentives for India’s cooperation with Saudi Arabia and the UAE, which it sees as beacons of “moderate Islam.”

That said, the drivers of deeper and expanding India-Israel relations continue to be economic and security ties. Since the 1990s, Israeli weapons, surveillance tech and security training have played a growing role in India’s efforts to forge a high-tech military, assisting at critical times such as during the Kargil War with Pakistan in 1999. Yet over time, that partnership has become more reciprocal, with India exporting military equipment to Israel, including explosives, munitions and drones, which have reportedly been used in Gaza.

Economically, it has led to increased trilateral collaboration with Israel and India’s Gulf partners. For example, Israeli agricultural tech initiatives in India, such as drip irrigation and desert farming, were backed by Emirati funding, highlighting a convergence of Israeli technology, Indian agricultural programs and Gulf capital. While this builds upon the I2U2 framework, the initiatives themselves are expanding beyond it.

And though the lack of normalized ties between Israel and Saudi Arabia prevent involving Riyadh in any deeper formal collaboration on the multilateral level, Riyadh has joined with Abu Dhabi to bolster ties with New Delhi, particularly in the energy, security and logistics sectors. A $50 billion joint venture between Saudi Aramco, the UAE’s ADNOC and Indian state-owned firms to develop New Delhi’s massive West Coast Refinery & Petrochemicals project in Maharashtra is one notable example.

Beyond commercial exchanges, India and the UAE have also launched connectivity projects seeking to advance IMEC’s multilateral blueprints on a broader bilateral level. This trend seems to be continuing given that IMEC enjoyed limited follow-up attention from the Biden administration due to fallout from the war in Gaza, particularly tensions between Israel and Iran that threaten IMEC’s need for regional stability.

Yet India’s pursuit of non-dollar trade and bilateral infrastructure investment signals New Delhi’s desire to pursue frameworks of cooperation that aren’t confined to Washington’s orbit. And while India has expressed keenness to cooperate within the IMEC and I2U2, it has shown it can still press ahead with key components of these frameworks without deep U.S. involvement. That ultimately complements India’s goal of maintaining a nonaligned and flexible foreign policy.

In that sense, despite what some U.S. policymakers may have envisioned, these frameworks have provided India with a springboard rather than a leash in its regional engagement. Trump’s continued support for IMEC and I2U2, along with his open praise for Modi during their business-focused meeting in February, has reinforced their appeal to the White House, at least in principle.

Even so, there may be further obstacles to IMEC’s implementation besides the threats to regional stability. For instance, Trump’s tariffs on European goods and unpredictable trade policies may hinder coordination within IMEC. That India itself was slapped with a 27 percent tariff last week may further sharpen its appetite for pursuing strategic autonomy in economic relations, including with European and Middle Eastern partners, even as it continues negotiating more favorable trade terms with Washington in the short term, given that the U.S. remains New Delhi’s largest export destination.

Beyond tariffs, other sticking points to the bilateral relationship remain, including India’s BRICS membership. Trump’s warning of tariffs and other penalties for BRICS members if they sought to challenge the dollar’s hegemony may have put India on notice, even if its non-dollar trade is marginal at this point.

Moreover, India will have to ensure that its relationship with the Trump administration is not undermined by its ties with Iran. In May 2024, after years of negotiations and memoranda of understanding, New Delhi and Tehran finalized an agreement for India to develop and operate Iran’s Chabahar port. India has long pursued the deal as a way to bypass land routes through Pakistan for its trade with Central Asia, while also countering the China-Pakistan Economic Corridor, or CPEC. 

U.S. opposition has long been the biggest obstacle to such a deal, with the Biden administration warning of possible sanctions when it was signed last year. Trump’s return to a “maximum pressure” campaign on Iran may pile even more pressure on New Delhi over its ties with Tehran, given that the Trump administration specifically cited the Chabahar port deal when it rolled out its new Iran policy in February.

While India will have to walk a diplomatic tightrope following Trump’s return, it is clearly seeking to write the next chapter of its regional engagement autonomously. And while working with Washington-led frameworks to increase its clout, New Delhi is betting on the Gulf and Israel as key partnerships that could advance even without deeper U.S. engagement.