Many Indian exporters are shifting their operations to the UAE to avoid high tariffs imposed by the US. This change is significant and gaining momentum.
“The shift has started,” said Faizal Kottikollon, chairman of the UAE chapter of the UAE-India Business Council. “It’s huge already.”
In August, President Trump announced a hefty 25% duty on imports from India, effectively doubling the tariffs on many goods to 50%. The move was linked to India’s energy dealings with Russia, highlighting concerns for national and economic security.
The response has been notable. Scott Cairns, managing director of Creation Business Consultants in Dubai, reported a 40% increase in inquiries from Indian investors, particularly in trade, healthcare, and manufacturing sectors. “These inquiries are mostly about establishing operations in free zones and the mainland,” he noted.
To keep access to their primary overseas market, many Indian firms now see the UAE as a low-tariff hub for manufacturing and re-export. Duties in the UAE are considerably lower, often around 10%. This makes it an attractive place for businesses to meet US “rules of origin” requirements, which offer favorable tariffs based on local value addition.
Companies are setting up various operations in the UAE, including assembly and packaging, to meet requirements for reclassification as Emirati products. Kottikollon emphasized, “They bring semi-finished goods and complete them here.”
Textiles and jewelry are among the leading sectors making the move. “These industries can set up quickly, and we’re seeing growth in both,” Kottikollon explained.
Construction on the Bharat Mart trading hub at Jebel Ali is set to begin soon. This facility aims to boost trade between the UAE and India by nearly one-third when it opens in early 2027. India’s commerce minister, Piyush Goyal, noted over 9,000 expressions of interest in the area, highlighting its potential for small and medium enterprises looking to grow. The hub will span 2.7 million square feet and feature 1,500 showrooms, further supporting Indian businesses in the region.
The UAE and India signed a comprehensive economic partnership agreement last year, aiming to increase non-oil trade to $100 billion annually by 2030. Interestingly, data for the first half of 2025 shows that non-oil trade reached $37.6 billion, marking a 34% rise from the previous year. Currently, the UAE is India’s third-largest trading partner, with Indian exports exceeding $36.6 billion in the financial year 2024-25.
As these trends continue, Indian businesses are poised for significant opportunities in the UAE, creating a win-win situation for both nations.
