New Delhi: The India-UAE Comprehensive Economic Partnership Agreement (CEPA), signed by New Delhi and Abu Dhabi Friday will benefit Indian products worth about $26 billion, by removing the five per cent import duty currently charged by UAE on these items.
The CEPA is the first comprehensive trade deal signed by India with a Gulf country. This is also India’s first trade agreement in a decade.
The agreement, expected to come into effect in the first week of May, is projected to double bilateral trade to $100 billion in the next five years, up from the current $50-60 billion, while eliminating tariffs on a range of products being exported by India and the UAE.
“This comprehensive economic partnership agreement covers a wide array of gains for both economies, provides opportunities for business in both economies,” Piyush Goyal, Commerce and Industry Minister, said Friday as he signed the deal with Abdulla bin Touq Al Marri, Minister of Economy (UAE) in New Delhi, post the virtual summit between Prime Minister Narendra Modi and and crown prince of Abu Dhabi and deputy supreme commander of UAE armed forces Sheikh Mohamed bin Zayed al Nahyan.
Addressing the media, Al Marri, said the India-UAE CEPA is a “milestone in the relationship between India and UAE and has been built on decades of enterprise and aspires to establish a new era of progress and prosperity for the people of both nations.”
The agreement will not only enable Indian exporters to gain market access in the UAE, but also provide wider access to the larger Arab and African regions.
Zero duty access on a range of items
Under the CEPA, which was negotiated in less than a year, UAE will be offering immediate duty elimination on over 80 per cent of its tariff lines, corresponding to 90 per cent of India’s exports in value terms. There will be zero duty imposed from the day the agreement comes into force, but its effect will be felt in a phased manner.
Indian products that are set to benefit include gems and jewellery, textiles and pharmaceuticals. On the UAE side, products like metals, minerals, petrochemicals, petroleum products and dates will stand to benefit.
“I’m confident that the UAE India Comprehensive Economic Partnership Agreement will be regarded as a towering achievement, a new era not only for our two nations, but for global trade”, said Al Marri.
On Friday, during a virtual summit, PM Modi and the Abu Dhabi Crown Prince, Sheikh Mohammed bin Zayed Al Nahyan, had also announced a joint Food Security Corridor Initiative, by way of an MoU between the Indian Agricultural and Processed Food Products Export Development Authority (APEDA) and UAE logistics firm DP World & Al Dahra.
Indian pharmaceuticals, textiles, plastics to benefit
According to Goyal, the CEPA will help India’s labour-intensive sectors and a separate annex has been incorporated to facilitate trade of Indian pharmaceutical products.
“Some of the major sectors that will benefit in India are gems and jewellery, textiles, leather, footwear, sports goods, plastics, furniture, agricultural products, engineering goods, pharmaceuticals, medical devices and automobiles. Most of these sectors are largely labour-oriented,” he said, adding that the deal is projected to bring in 10 lakh new jobs to India.
Citing an example of tariff reduction, Commerce Secretary B.V.R. Subrahmanyam said: “We’ve given tariff concessions to UAE on gold, and they have eliminated tariffs on jewellery”.
In a first, the UAE has also agreed to facilitate regulatory approval for Indian pharmaceuticals within 90 days, specifically those approved in developed countries like the US, the UK, the EU, Canada and Australia.
“The UAE has been gracious in accepting our request that once a medicine or medical product is accepted by developed countries like the US, EU, UK, Canada or Australia… it will get market access and regulatory approval in a time-bound manner of 90 days, to be marketed in the UAE,” said Goyal.
He added that cost-effective imports of petrochemicals from UAE will help the plastic industry in India.
Deal to add $8.9 billion to UAE GDP by 2030
From the UAE’s perspective, the deal is projected to add 1.7 per cent or $8.9 billion to the country’s GDP by 2030, and boost exports by 1.5 per cent, said Al Marri.
He explained that the FTA is part of the UAE’s plans to recover from the pandemic.
“It [pandemic] was a reset that challenged us to adapt a new perspective and expand our international ambitions. Strengthening bilateral relations with key partners became a key pillar,” he said, adding that the UAE aims to enhance its status as a “facilitator of global trade and accelerate investments and joint venture opportunities”.
He added that the deal will encourage further two-way investment in sectors such as hospitality, healthcare, logistics, construction and professional services.
The UAE had earlier shown interest in investment in Jammu and Kashmir, through several MoUs for setting up of infrastructure projects in the region. Most recently, the UAE-based LuLu Group agreed to invest Rs 200 crore in Jammu and Kashmir for a food processing and logistics hub in Srinagar.
Goyal added: “There’s a lot of interest for food processing to come in. There is an investment interest which is far exceeding our original expectations, particularly from the UAE”.
The CEPA also envisions greater collaboration between India and the UAE in the area of digital trade. The two nations have worked to establish a modern framework for digital commerce which covers data protection, digital consumer rights, digital signatures, digital identity and secure data flow.
Due to the ever-changing nature of digital trade, it will be a “nimble” part of the trade agreement that may be subject to change.
“There are some chapters [of CEPA] that we can add and amend, and digital trade is one of those that has a nimbleness and agility,” explained Al Marri.
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