The United Arab Emirates and India had signed a CEPA ( Comprehensive Economic Partnership Agreement) to increase bilateral merchandise trade to $100 billion by the year 2030.
This trade agreement between the UAE has marked the first trade agreement that India has been able to make with one of the major trading partners in the last decade. The last major FTA (Free Trade Agreement) India signed was with Japan in the year 2011. This is also one of the first agreements in a series of Free Trade Agreements that India has pursued to boost the Indian exports sharply to $1 trillion each in merchandise and services by 2030. The nation is also pursuing Free Trade Agreements with the United Kingdom, Australia, Israel, Canada, and the European Union.
Piyush Goyal, the Commerce Minister said that India could conclude the Free Trade Agreement with the GCC (Gulf Cooperation Council) group of countries involving Kuwait, Bahrain, Qatar, Oman, Saudi Arabia, and the UAE by the end of 2022. Under the agreement that was signed recently between UAE and India, the UAE is all set to eliminate duties on around 80 per cent of its tariff lines which currently account for 90 per cent of the Indian Exports to the UAE by value.
This agreement is highly significant In some of the highly competitive areas including textiles and garments where the Indian exporters had been facing a competitive disadvantage in importing tariffs. BVR Subrahmanyam, the commerce secretary said that the Indian textiles and leather exports are currently facing almost a 5 per cent duty in the United Arab Emirates while the same products from the competitors such as Bangladesh and Vietnam have had zero duty access. The zero duty access to the Indian products will be expanded over the next 5-10 years to 97 per cent of UAE tariff lines that will correspond to almost 99 per cent of the Indian exports by value.
The key domestic sectors that will be benefitting significantly from the agreement are gems and jewellery, leather, textiles, sports good, footwear, engineering goods, pharmaceuticals, and automobiles. The agreement is estimated to come into force from the first week of May this year and it is expected to generate around 10 lakh additional job opportunities in India.
India has also excluded certain goods from the list of goods through a sensitive list of products that are amounting to ten per cent of tariff lines that are completely excluded from this agreement. Some of the excluded products are fruits, dairy products, vegetables, tea, cereals, coffee, food preparations, sugar, toys, tobacco, the scrap of aluminium, plastics, and copper.
The Union government has stressed that this agreement contains some strict rules of origin for the prevention of other countries from using the agreement to reroute their export through the United Arab Emirates to benefit from the imposition from lower tariffs. The commerce secretary said that there will be regular contact between both nations for the harmonising of regulatory standards on managing the digital trade between the UAE and India. He also said that discussions of digital trade were ongoing with the United Kingdom, Australia, Canada, the European Union as well.