Friday, 17 May, 2024
Bilateral trade between New Delhi and Abu Dhabi has increased by approximately 15 percent since the entry into force of the CEPA on May 1, 2022. Image Source: IANS
In February 2022, India became the first country with which the UAE signed a Comprehensive Economic Partnership Agreement (CEPA).
While addressing at the ‘UAE India Business Summit’ held at the 10th edition of Vibrant Gujarat Global Summit in Gandhinagar, Gujarat, the Union Minister of Commerce & Industry, Piyush Goyal underscored the multifaceted nature of the India-UAE partnership, encompassing collaborations in space exploration, security, education, and climate action. He further said that New Delhi and Abu Dhabi aspire to expand their bilateral trade to $100 billion. He said that the bilateral trade has increased under the India UAE Comprehensive Economic Partnership Agreement (CEPA). It was signed on February 18, 2022 and came into force on May 1, 2022. It was signed during a virtual summit between the Prime Minister of India, Narendra Modi and His Excellency the President of the UAE and Ruler of Abu Dhabi, Sheikh Mohamed bin Zayed Al Nahyan.
CEPA has made a substantial impact on India's bilateral trade with the UAE over the past year, particularly India's exports of both oil and non-oil goods to the UAE. During the fiscal year 2022–2023, bilateral trade between India and the UAE reached record highs. Trade increased by 16 percent compared to the previous year from $ 72.9 billion (Apr 21–Mar 2022) to $ 84.5 billion (Apr 22–Mar 2023). During the CEPA Implementation period (from May 22 to Mar 23), bilateral trade increased from $ 67.5 billion (May 21-Mar 2022) to $ 76.9 billion (May 22-Mar 2023) – an annual increase of 14 percent. During the CEPA Implementation period (May 22 – March 23), India’s exports to the UAE increased from $26.2 billion (May 21 – March 22) to $28.5 billion (May 22 – March 23); an 8.5 percent y-o-y growth. During the same period, India’s global exports, excluding the UAE, grew at 3.1 percent. India’s Imports from the UAE have grown to $53.2 billion (an annual increase of 18.8 percent) during Apr 22 to Mar 23. Non-oil imports during the same period grew by 4.1 percent.
According to a Zee Business report, CEPA was the fastest executed bilateral agreement under which the exports increased between India and United Arab Emirates (UAE). The deal increased commerce as well, which helped the domestic market.
India-UAE trade rose to USD 85 billion in 2022, making the UAE India’s third-largest trading partner for the year 2022-23 and India's second-largest export destination. India is the UAE’s second largest trading partner. In February 2022, India became the first country with which the UAE signed a Comprehensive Economic Partnership Agreement (CEPA). Bilateral trade has increased by approximately 15 percent since the entry into force of the CEPA on May 1, 2022.
Source: Ministry of Commerce and Industry
In 2022–2023, commerce between India and the UAE was valued at $84.5 billion. The UAE, which imports the majority of its food needs, has promised to invest $2 billion in the creation of several food parks in India. By 2030, the two parties also agreed to grow non-petroleum trade to $100 billion.
According to Foreign Secretary Vinay Kwatra, since the CEPA was signed in 2022, the two countries' commercial and economic ties have greatly improved. According to him, the two agreements on the use of domestic currencies for trade settlement and the integration of payment systems pave the way for more strategic economic convergence between the two sides.
The CEPA is the first comprehensive free trade agreement (FTA) that India has signed in the previous ten years. Over 80 percent of the goods traded between India and the UAE are eligible for preferential market access under the CEPA. In particular, sectors including gems and jewellery, textiles, leather, footwear, sporting goods, plastics, furniture, agricultural and wood products, engineering products, medical equipment, and vehicles will profit from the decrease or abolition of tariffs on India's exports to the UAE.
The CEPA covers 11 broad service sectors and more than 100 sub-sectors. A liberal and nondiscriminatory regime for cross-border investment between India and the UAE is provided by the CEPA. Provisions on dispute resolution and collaboration for investment facilitation are also covered.
One of the question which would come across our minds is that why did India and UAE sign a CEPA rather than a Free Trade Agreement (FTA). In terms of partnerships over a greater coverage of areas and the type of agreements, CEPA is, as its name implies, is more extensive and ambitious than an FTA. A CEPA is more ambitious in terms of a comprehensive covering of many areas, such as services, investment, IPR, government procurement, disputes, etc., whereas a standard FTA focuses only on products. Second, compared to an FTA, CEPA takes a closer look at the regulatory aspects of trade.
Under the India-UAE CEPA in the Goods Domain, the UAE eliminated duties on 97.4 percent of its tariff lines corresponding to 99 percent of imports from India. India has obtained immediate duty elimination on over 80 percent of its tariff lines corresponding to 90 percent of India’s exports in value terms.
Goyal said that both the countries are looking for newer propositions from industry and business to further enhance their partnership. He said bilateral trade has increased under the India UAE Comprehensive Economic Partnership Agreement (CEPA). He also highlighted key collaborations such as the India-Middle East-Europe economic corridor and initiatives to promote Rupay and facilitate direct trade between rupee and dirham.
