Abstract
India’s economic engagement with the Gulf has historically been managed as a high-volume but low-transaction: crude and gas purchases on one side and labour remittances on the other, duly intermediated by the US dollar and conducted contract by contract rather than as a coherent economic strategy. This paper argues that, since 2022, that model has been deliberately re-engineered into something qualitatively different, structural economic interdependence built on three instruments. The first is a treaty architecture of Comprehensive Economic Partnership Agreements, beginning with the United Arab Emirates and now replicated with Oman and the wider Gulf Cooperation Council. The second is a rupee-dirham local-currency settlement framework that introduces a monetary dimension to the relationship and operationalises the Reserve Bank of India’s broader rupee-internationalisation roadmap. The third, and most distinctive, is the export of India’s digital public infrastructure: payment rails, card networks, and the technical stack beneath them into Gulf financial systems. Drawing on the theory of complex interdependence, on the economic-statecraft literature concerning trade asymmetry and networked power, and on the regional political economy of India-Gulf relations, the paper maps this architecture, demonstrates its functioning through trade outcomes, currency settlements, and digital rollouts; and identifies three structural fragilities, deficit asymmetry, thin monetary uptake, and the adoption-and-sovereignty tension in digital infrastructure that condition its durability. It closes with six recommendations directed at the trade-policy and strategic community.
