INDIA & UAE’S CEPA TO COME INTO FORCE FROM MAY 1st, $40 BILLION EXPORTS LIKELY IN FY23
The Union Minister for Commerce and Industry, Consumer Affairs, Food and Public Distribution, and Textiles, Government of India Shri Piyush Goyal attended the “Investopia Summit” and the “World Government Summit” held on March 28th and March 29th, 2022, hosted by the Government of the UAE, following which the text of the India-UAE CEPA was made available for the public domain. Shri Piyush Goyal, India’s Commerce and Industry Minister, announced that the negotiations for the India-UAE Comprehensive Economic Partnership Agreement (CEPA) will come into force with an effective date of May 1st, 2022, enabling duty-free access to 90 percent of the country’s exports to the Emirates. According to recent news reports, the first consignment of jewelry exports from India to the UAE under the CEPA was sent with zero effective duty, as of May 1st, 2022.
The India-UAE CEPA was signed in New Delhi, on February 18, 2022, during the India-UAE Virtual Summit between Shri Narendra Modi, The Prime Minister of India, and His Highness Sheikh Mohammed Bin Zayed Al-Nahyan who is the Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces and Chairman of the Executive Council.
It is a landmark agreement in any case, as it is the United Arab Emirates’ first Comprehensive Strategic Partnership with any country, and it is India’s first Free Trade Agreement (FTA) in well over a decade. The partnership has come out with numerous objectives and initiatives, and one of the primary objectives is to increase the bilateral non-oil trade to US$ 100 billion in the next five years. The Agreement will cover Trade in Goods, Rules of Origin, Trade in Services, Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) measures, Dispute Settlement, Movement of Natural Persons, Telecom, Customs Procedures, Pharmaceutical products, Government Procurement, IPR, Investment, Digital Trade and Cooperation in other Areas.
In the next five years, it is predicted that bilateral trade between the India and UAE will expand from $60 billion to $100 billion benefitting from the newly concluded CEPA. The Union Minister of India for Commerce and Industry, Shri Piyush Goyal stated, “The agreement will open up a lot of opportunities for our MSMEs and provide job opportunities to the tune of 1 million for our youth. It is a win-win for both economies and our people.”
Moreover, in this CEPA, tariffs, and duties on India’s major exports will be reduced to zero, for 90 percent of the products exported by India to the UAE which would be beneficial for labor-intensive sectors like finished petroleum products, precious metals, stones, gems, and jewelry, minerals, food items — such as cereals, sugar, fruits and vegetables, tea, meat, and seafood — textiles, engineering, and machinery products, chemicals and plastic. However, to maximize the gains from the comprehensive partnership between India and the UAE, the countries need to enhance Global Value Chain (VGC) participation. Therefore, to take complete advantage of the CEPA, India needs to acquire a more holistic and wholesome approach for better value integration.