Decoding India-UAE defense ties

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WHAT WE’RE TRACKING TODAY

THIS AFTERNOON: Indian tankers exit Hormuz; India, US trade talks

Good morning, wonderful people. We are kicking off the week with a packed issue and a hint of optimism, as US-Iran talks in Switzerland have led to encouraging progress. Meanwhile, three Indian-flagged tankers carrying Gulf crude oil have crossed the Strait of Hormuz following the agreement.

The big story today: India’s ambitious push to position itself as a major weapons supplier to the UAE is not materializing quickly enough. Despite high-level political alignment, India-UAE defense trade remains episodic rather than structural, New Delhi-based experts tell us exclusively.

Reliance’s Jio Platforms has filed papers for what could be India's largest IPO, looking to raise up to INR 360 bn and providing a valuation marker for its Gulf backers.

Plus: Abu Dhabi Investment Authority is expanding its India footprint by joining a consortium to back a stake purchase in drugmaker Corona Remedies.

India-US trade framework

India and the US are closing in on an interim trade framework. US Trade Representative (USTR) Jamieson Greer is scheduled to visit India tomorrow for two days of talks with the Commerce Ministry, Hindu reports. Two Indian government sources told the daily that the interim trade framework needs only “final touches” and that the US is keen to close an agreement.

The talks still hinge on whether New Delhi secures lower tariffs on its exports, similar to other Asian nations. The agreement cannot be implemented unless Indian exports get lower duties than competing suppliers, Commerce Minister Piyush Goyal told the daily.

Why it matters: A successful agreement between New Delhi and Washington may slow India’s trade diversification policy. India had doubled down on trade with Gulf nations, its Asian peers, and the EU in a bid to reduce the impact of steep tariffs on the Indian economy.

IN CONTEXT- Under a framework in February, the US agreed to reduce effective tariffs on Indian goods to 18% from 50%. However, the agreement was thrown to the wind after the US Supreme Court invalidated Trump’s reciprocal tariffs, leaving India with an unfavorable agreement.

A separate USTR investigation into forced-labor-linked imports is also an impediment to the talks. The trade department has proposed a 12.5% tariff on 54 countries, including India, for violating forced-labor norms. India has protested the investigation and made its submissions to the US to oppose the allegations.

Three Indian tankers clear Hormuz

Three Indian-flagged tankers carrying more than 860k tons of crude oil have transited the Strait of Hormuz and are now sailing toward India, Shipping Minister Sarbananda Sonowal said on X.

Critical energy cargoes en route: The vessels — Desh Vaibhav, Desh Vibhor, and Sanmar Herald — crossed the strategic waterway after the US and Iran signed an interim agreement that temporarily restored shipping access through Hormuz. Prior to this transit, 13 Indian-flagged cargo vessels had remained stranded around Hormuz due to security risks and shipping disruptions.

Uncertainty returns to key shipping route: The successful passage came hours before Iran’s military announced a renewed closure of the strait, citing regional security concerns and alleging US non-compliance with ceasefire commitments.

The big story abroad

Ongoing US-Iran peace talks in Switzerland have made “encouraging progress,” establishing a 60-day roadmap for a final agreement, mediators said. The parties agreed to set up a communication line for safe shipping through the Strait of Hormuz and a “de-confliction cell” with Lebanon to help maintain the halt in military operations.

Talks had looked incredibly fragile just hours earlier. US President Donald Trump threw a wrench into the negotiations, threatening to restart strikes and demanding Tehran stop Hezbollah from “causing trouble.” The Iranian delegation reportedly paused negotiations in response to Trump’s threats.

SpaceX flunks ESG metrics: Elon Musk’s SpaceX received the lowest possible environmental, social, and governance (ESG) rating from index provider MSCI, scoring a triple C. The report found that the company is “lagging its industry based on its high exposure and failure to manage significant ESG risks,” and is indirectly involved in one or more serious controversies.

Wars are changing the way VCs look at defense startups: Defense technology startups are attracting USD bns as investors flock to the sector amid drone-heavy wars in Ukraine and the Gulf. Sector companies have raised USD 12.3 bn from VC funds so far this year, already eclipsing last year’s full-year total of USD 10 bn.

It’s shaping up to be a boom year for the box office, with estimates now expecting US theaters to rake in some USD 4.5 bn this year, the highest figure since the Covid-19 pandemic six years ago, thanks to a string of blockbusters, the latest of which is Disney’s Toy Story 5.

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THE BIG STORY TODAY

India-UAE defense pitch collides with commercial reality

India’s campaign to position itself as a weapons supplier to the UAE is running into a hard commercial reality. Despite high-level political alignment, recent bilateral trade data reveals a widening gap between diplomatic statements and tangible procurement orders.

The defense trade flip: Indian defense exports to the UAE halved in FY 2025 to USD 1.3 bn, while imports from the UAE skyrocketed over 71% to an all-time high of USD 3.1 bn, as per India’s Commerce Ministry data.

“The data does suggest that India-UAE defense trade remains episodic rather than structural,” Lt. Gen. Deependra Hooda, a defense expert and retired Indian Army Commander, tells EnterpriseAM.

One-off transactions: Aircraft, spacecraft, and ships accounted for more than 99.8% of India-UAE defense trade between FY 2022 and FY 2025, while arms and ammunition represented just 0.16% of total flows and never exceeded USD 10.2 mn in annual exports. The numbers point to a relationship driven by a handful of large aerospace and maritime transactions rather than an integrated defense supply chain.

The view is echoed by civilian experts. “The UAE is diversifying its defense partnerships and wants systems that are battle-tested and deployable immediately,” Kabir Taneja, executive director at Observer Research Foundation Middle East, tells EnterpriseAM.

The challenge: Converting the existing strategic framework into a visible portfolio of defense orders, joint ventures, and manufacturing projects. That requirement has benefited suppliers such as South Korea, whose defense industry combines access to Western technology, rapid production cycles, and proven operational credibility, says Taneja.

On paper, the defense ties appear strong. New Delhi and Abu Dhabi inked a Strategic Framework for Defense Industrial Collaboration during UAE President Sheikh Mohammed bin Zayed Al Nahyan's January visit to India, covering defense industrial cooperation, special operations, and counterterrorism.

“We should be measuring outputs rather than hailing agreements. We have to see how many contracts have been signed, how many joint production facilities have been set up, and how technology sharing is progressing. If these indicators are not visible in the next two years, the agreement would need a serious high-level review,” Hooda says.

By the numbers: India’s defense exports touched an all-time high of USD 4.4 bn in FY 2026. Annual defense production reached a record USD 20.7 bn in FY 2026, up 15.6% y-o-y from USD 17.9 bn.

However, there is a credibility gap: Despite growing exports, India still lacks the track record required to convince Gulf buyers that its systems can be reliably deployed in modern warfare environments — and limited private-sector participation is a barrier to scaling defense cooperation. “India's domestic defense ecosystem continues to struggle with research and development, industrial capacity, and delivery timelines,” Taneja argues.

“The frustration is real, well-documented, and shared by virtually every country that has attempted to do defense business with India,” Hooda says, describing India’s procurement system as excessively complex, opaque, and slow. The result is a mismatch between political intent and commercial execution. Despite strong leadership-level ties, major defense projects have struggled to materialize, he argues.

“Much of the cooperation so far has focused on training and military exercises. The UAE has capital, and India has manpower. There is a natural case for joint R&D,” Taneja says. India's Atmanirbhar Bharat program and the UAE's push for defense indigenization mean both countries increasingly want domestic manufacturing and technology ownership. This creates a natural convergence around joint research, production, and intellectual property sharing.

On the menu: The BrahMos cruise missile (a joint India-Russia production) is a capable system, but the UAE can buy similar technology from Western suppliers while also gaining political advantages from those purchases, Taneja notes. Akash is a cost-effective air defense system, but the UAE already operates a sophisticated, layered air and missile defense ecosystem involving US systems, says Hooda. While systems such as BrahMos have attracted attention, both experts note that Emirati systems remain deeply integrated into Western defense ecosystems, particularly US systems.

The UAE increasingly demands indigenization. It is building its own defense ecosystem through companies such as Edge Group. Future cooperation will likely require co-development and industrial partnerships — like its pact with Adani Defense & Aerospace — rather than a simple buyer-seller relationship.

A realistic ceiling for defense trade is USD 2-3 bn annually over the next five years, Hooda estimates. “Private-sector partnerships are more agile and have [windows] to get into niche technology areas like counter-drone systems, unmanned systems, electronic warfare, and cyber. For the partnership to succeed, it needs to produce commercially viable systems in the next few years,” Hooda says.

And the government needs to get out of the way? “The government still exercises significant control over defense manufacturing. The gap between government and private industry must be reduced. Private firms need greater freedom to develop and market technologies. Defense is highly competitive, and India should not be constraining its own industry,” Taneja argues.

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IPO WATCH

Adia, PIF, and Mubadala-backed Jio Platforms eyes USD 3.8 bn IPO

Gulf SWF-backed Jio Platforms has officially filed draft papers for a Mumbai listing that could raise up to INR 360 bn (USD 3.81 bn). The digital and telecom crown jewel of b’naire Mukesh Ambani’s Reliance Industries conglomerate is priming itself for a listing that could become the largest listing on India’s stock markets.

Where the Gulf capital sits: Saudi Arabia’s Public Investment Fund anchors a 2.32% stake, while Abu Dhabi’s Mubadala Investment Company holds 1.85%, and the Abu Dhabi Investment Authority controls 1.16%. They sit alongside a star-studded roster of global tech investors, including Meta Platforms, Alphabet, Vista Equity Partners, KKR, General Atlantic, and Silver Lake. The listing will only create a valuation marker for those investors after an earlier offer-for-sale plan was scrapped, limiting an exit window for the Gulf investors.

The share sale is expected to dilute roughly 2.9% of Jio Platforms’ post-issue equity, valuing the business at around INR 12.5 tn (USD 131 bn), Reuters reports. Jio Platforms includes Reliance Jio Infocomm, the world’s second-largest telecom provider along with AI, cloud, and enterprise network businesses.

The IPO could become India’s largest if completed at that size, surpassing Hyundai Motor India’s INR 278.7 bn (USD 2.95 bn) listing in 2024. The prospectus does not include the final fundraising target, and final details may change closer to the listing.

Debt repayment: Jio Platforms plans to use most of the IPO proceeds to repay an estimated INR 275 bn (USD 2.92 bn) of Reliance Jio Infocomm’s debt, according to the draft prospectus. The repayment would support further investment in 5G network expansion, fixed broadband, and AI and cloud services.

Beyond telecom: Jio Platforms has expanded into AI, cloud, enterprise networks, and app development, including a 2023 AI partnership between Reliance and US-based chipmaker Nvidia to develop cloud infrastructure and LLMs. It reported operating revenue of around INR 1.49 tn (USD 15.6 bn) in FY 2026 and net income of around INR 304 bn (USD 3.19 bn).

Advisors: Kotak Mahindra Capital, Morgan Stanley India Company, BofA Securities India, Axis Capital, and BNP Paribas are among the long list of bookrunning lead managers for the IPO. KFin Technologies is the registrar to the issue.

Market test: The IPO comes as India’s capital markets cool after volatility linked to the US-Israel conflict with Iran. India was the world’s second-largest IPO market in 2025, but market swings triggered by the war have slowed new listings.

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M&A WATCH

Adia buys into Corona Remedies

Adia adds another Indian name to its portfolio: Abu Dhabi Investment Authority (Adia) has backed India-based drugmaker Corona Remedies’ INR 7.77 bn (USD 82.4 mn) stake sale, joining a consortium of investors that bought a 7.3% stake in the company, Zawya reports. The Abu Dhabi SWF bought 39.1k shares at INR 1.7k apiece, alongside UK-based investment firm Aberdeen Group.

Who bought and sold? Sepia Investments, Anchor Partners, and Sage Investment Trust sold a combined 4.58 mn shares on 17 June, with Sepia trimming its stake to 12.6% from 19.7%. Domestic mutual funds and investment firms are also among the buyers, The Hindu Businessline reports, citing NSE block transaction data.

Who are they? Ahmedabad-based Corona Remedies develops and markets pharma formulations across women’s healthcare, cardio-diabetes, pain management, urology, and other therapeutic areas.

Why it matters: The transaction adds to Adia’s India portfolio, which already spans healthcare, industrials, energy, food and beverage, and retail. Earlier this month, the SWF also committed USD 675 mn check for Kotak’s real estate fund and backed Acme Solar Holdings’ qualified institutional placement.

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AVIATION

India moves to challenge Gulf aviation hubs with new transit model

India is accelerating plans to turn Delhi, Mumbai, and Bengaluru into global transit hubs, as disruptions caused by the Iran war expose the risks of relying on Gulf airports such as Dubai, Abu Dhabi, and Doha for international connectivity, The Economic Times reports.

The strategy: The government of India has rolled out an integrated framework centered around a hub-and-spoke model that would allow passengers from smaller Indian cities to connect seamlessly to long-haul international flights through major domestic airports.

Immigration overhaul: As part of the initiative, the government has eased immigration and baggage-transfer protocols at domestic airports, allowing passengers to transfer directly to international flights without re-checking in.

Why it matters: Currently, around 85% of India’s international connecting traffic passes through global aviation hubs, including Dubai, Abu Dhabi, Singapore, Frankfurt, and London. To reclaim this lucrative market, Air India is set to launch a pilot program next week. The initiative will allow regional travelers to clear international customs at their initial point of departure, bypass repeat security screenings, and take advantage of a newly designed 20-minute airside transfer system at the New Delhi international airport.

What’s next: If successful, the strategy would be expanded to other smaller cities and airlines in a bid to retain a larger share of international passenger traffic and bolster the revenues of the aviation sector.

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ALSO ON OUR RADAR

Air India Express expands Mumbai-UAE corridor

Air India Express will be the first carrier to operate internationally from Navi Mumbai International Airport, launching direct flights to Abu Dhabi from 15 July, boosting connectivity between India's financial capital region and the UAE, Zawya reports. The route will initially operate twice a week before increasing to three weekly flights from 29 July.

Why it matters: The India-UAE aviation corridor is one of the busiest international travel markets for Indian carriers. For Navi Mumbai Airport, securing its first international route is a key step toward establishing itself as a competitive gateway alongside Mumbai's existing airport and capturing growing Gulf-bound passenger traffic.

World Bank backs India’s reform agenda

The World Bank has approved USD 1.5 bn in financing to support reforms that accelerate private-sector-led job creation and sustain long-term economic growth in India, as per a statement. The funding is designed to help India address development financing needs while advancing key economic reforms.

Focus on jobs and investment: The program could help create employment windows for the nearly 11 mn young people expected to enter India's labor market annually over the next two decades.

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PLANET FINANCE

Private equity firms turn to debt-funded payouts as exit bottleneck drags on

Private equity firms are increasingly borrowing against portfolio companies to pay themselves as traditional exits remain difficult. More than USD 3.5 bn of leveraged loans and junk bonds have been launched over the past four weeks to fund sponsor dividends, accounting for roughly half of all dividend recapitalization activity this year, Bloomberg reports.

The resurgence of dividend recaps reflects a broader challenge facing the industry: According to Bain’s latest Global Private Equity Report (pdf), a growing number of portfolio companies are now “essentially trapped” as higher interest rates and stubborn valuation gaps make it harder for buyout firms to sell assets at acceptable prices. Many firms are also holding investments well beyond the traditional three-to-five-year timeline.

This is creating pressure to return money to limited partners some other way: Managers are facing a growing backlog of aging assets, while limited partners are placing greater scrutiny on firms’ ability to generate distributions, Bain says.

The exit market is showing signs of recovery, but not enough to clear the bottleneck: Global buyout-backed exit value jumped 47% y-o-y to USD 717 bn in 2025, making it the second-best year on record, according to Bain. Yet the number of exits fell 2% to 1.6k transactions, suggesting the rebound was driven largely by a handful of blockbuster transactions rather than a broad recovery across the market.

As a result, firms are increasingly turning to alternative liquidity tools: Bain says returning capital to investors is now the top reason sponsors launch continuation vehicles, while secondary sales and dividend recapitalizations are also becoming more common.

Those alternatives remain relatively small: Continuation vehicles still account for less than 10% of global exit value, according to Bain. But their growing use underscores a reality facing much of the industry — selling assets remains harder than buying them.

MARKETS THIS MORNING

Asia-Pacific markets were trading up this morning, led by South Korea’s Kospi and Japan’s Nikkei. Over on Wall Street, equities are set to open lower with US futures down this morning, as news of US President Donald Trump’s threats of renewed attacks against Iran makes the rounds.

Sensex

77,142

+0.4% (YTD: -9.4%)

NIFTY 50

24,109

+0.4% (YTD: -7.8%)

ADX

10,016

-0.9% (YTD: -0.5%)

DFM

6,169

+0.09% (YTD: +2%)

Tadawul

11,061

-0.1% (YTD: +5.4%)

EGX30

52,511

-0.3% (YTD: +25.5%)

Boursa Kuwait

8,789

-0.08% (YTD: +5.8%)

QSE

10,474

-0.06% (YTD: -2.6%)

S&P 500

7,500

+1% (YTD: +9.5%)

FTSE 100

10,362

-0.01% (YTD: +4.3%)

Euro Stoxx 50

6,295

+0.03% (YTD: +8.7%)

Brent crude

USD 79

-1.8%

Natural gas (Nymex)

USD 3.3

+2.8%

Gold

USD 4,227

+1.3%

BTC

USD 64,073

-0.1%

The values in the table above are listed according to the market position as of 3:30pm IST / 2pm GST.


24-25 June (Wednesday-Thursday): India Homeland Security Expo, Bharat Mandapam, Pragati Maidan, New Delhi.

26 June (Friday): Muharram.

Signposted to happen sometime in 1H 2026:

JULY

1-3 July (Wednesday-Friday): Seafood Expo Bharat, Chennai Trade Centre, Chennai.

3-4 July (Friday-Saturday): Rail & Transit Expo (RailTrans), Bharat Mandapam, New Delhi

3-4 July (Friday-Saturday): SOMS International Exhibition & Conference, Gandhinagar, Gujarat.

8-10 July (Wednesday-Friday): India Energy Storage Week, New Delhi.

14-17 July (Tuesday-Friday): Bharat Tex, New Delhi.

22-24 July (Wednesday-Friday): Rail & Metro Technology Conclave, Bharat Mandapam, New Delhi.

AUGUST

15 August (Saturday): Independence Day.

26 August (Wednesday): Prophet Mohammad’s Birthday.

SEPTEMBER

1-3 September (Tuesday-Thursday): India Energy Week, Dwarka, New Delhi.

1-6 September (Monday-Saturday): Dubai Fashion Week, Dubai Design District.

7 September (Sunday): Opec+ meet to discuss production policy for October.

7-9 September (Monday-Wednesday): iPHEX 2026 International Pharmaceutical Exhibition, Bharat Mandapam, New Delhi.

8-11 September (Tuesday-Friday): Global Fintech Fest, Mumbai.

9 September (Tuesday): Envision 2025, Atlantis, The Royal, Dubai.

17-19 September (Thursday-Saturday): Semicon India Conference, Yashobhoomi, Delhi.

OCTOBER

2 October (Friday): Gandhi Jayanti (Mahatma Gandhi’s Birthday).

20 October (Tuesday): Dussehra.

NOVEMBER

24 November (Tuesday): Guru Nanak Jayanti.

DECEMBER

8-11 December (Tuesday-Thursday): Expand North Star, Dubai.

25 December (Friday): Christmas Day.

Signposted to happen sometime in 2H 2026:

  • Monsoon Session of Parliament is expected to be held in July/August in New Delhi (TBA);
  • Reserve Bank of India’s Monetary Policy Committee meeting for the September cycle (TBA);
  • India Mobile Congress will likely be held in October in New Delhi (TBA).

JANUARY 2027

30 January-3 February (Saturday-Wednesday): Printpack India, India Expo Centre, Greater Noida (Delhi NCR).

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