Introduction
The India-UAE Comprehensive Economic Partnership Agreement (CEPA) that became effective on May 1, 2022, is a radical change in the bilateral economic relationships between the two countries. The pace at which this agreement was negotiated is highly remarkable, as the agreement took only 88 days between its inception and finalisation, which is the shortest period in the history of agreements between the two nations, in their determination to integrate their economies. The CEPA creates one of the largest trade corridors in Asia, providing a framework that transcends free trade agreements based on goods alone and includes services, investment, intellectual property rights, digital trade and government procurement. This broad-based strategy makes the economic partnership more holistic and aimed at leveraging the complementary comparative advantages of the two economies and generating significant new trade diversification and development possibilities.
The strategic significance of the India-UAE CEPA could not be overestimated. Before implementation, the UAE was already the third-largest trading partner of India to which bilateral trade worth approximately $59 billion was available in 2019-20. The agreement has established a challenging goal of raising the bilateral trade in goods to 100 billion US dollars five years after signing, and enhancing trade in services to 15 billion US dollars after five years. These two alliances bring together the manufacturing strength of India and the strategic location of the UAE as a bridge to the African, European, and Middle East markets to generate synergistic advantages that go well beyond the bilateral trade relationship. The tariff liberalisation schedules that are woven into the CEPA comprise the heart of how these trade expansion objectives are likely to be done, and thus are essential to comprehend the potential economic impact of the agreement.
CEPA is a broad version of trade agreement that goes beyond tariff reductions on goods. Unlike conventional FTAs, CEPAs cover trade in goods, trade in services, investment protection, intellectual property rights, government procurement, competition policy, customs cooperation, dispute settlement mechanisms, and regulatory transparency. The objective is not only to liberalise trade but also to create a stable and predictable business environment that supports long-term economic cooperation.
How Many Trade Agreements Does India Have?
More than a dozen bilateral trade agreements/FTAs, and regional trade agreements (Comprehensive Economic Cooperation Agreements – CECAs; Comprehensive Economic Partnership Agreements – CEPAs) have been signed by India. Among these, India has signed Comprehensive Economic Partnership Agreements with key strategic partners, including:
- Japan (India-Japan CEPA – 2011),
- South Korea (India-Korea CEPA – 2010),
- United Arab Emirates (India-UAE CEPA – 2022)
- Mauritius (CECPA – 2021)
Additionally, India has either completed or is negotiating similar types of comprehensive agreements with countries/regions such as the EU, Canada, and the Gulf Cooperation Council (GCC), which indicates its intention to build partnerships for high-quality trade.
Key Components of a CEPA
CEPAs address the realities of today’s global trade environment by including core components, such as:
- Accessing Global Markets through Goods: Reducing or eliminating tariffs on a wide range of products, either incrementally over time, or all at once.
- Services Liberalization: Making it easier for professional service providers (lawyers, bankers, information technology professionals, health care providers, and educators) to enter the market.
- Promoting and Protecting Investment: Creating transparent rules so that potential foreign investors (FDI) will have an incentive to invest.
- Rules of Origin: Creating the requirements for manufacturers to avoid third-party exploitation of tariff preference programs.
- Tariff Administration and Trade Facilitation: Providing streamlined customs processes, which will speed the movement of goods through customs.
- Effective Dispute Resolution Mechanisms: Creating a mechanism to facilitate expediently resolving trade-related disputes.
Why CEPAs Are Important to India
In terms of increasing India’s competitive standing on a global scale, a CEPA provides a major benefit to India through access to preferential market entry for Indian exporters, particularly those in the pharmaceutical, textile, engineering goods, IT, and MSME sectors, in partner countries. A CEPA also provides Indian consumers and manufacturers with opportunities to access quality imports at lower prices.
From an investment perspective, CEPAs signal policy stability and regulatory certainty, making India a more attractive destination for global investors. The India–UAE CEPA, for example, has significantly boosted bilateral trade and investment flows within a short period of implementation.
Importance of Current Events Around the World
With so many current issues such as mining disruptions in supply chains, political instability, and increases in nationalism, Comprehensive Economic Partnership Agreements (CEPAs) allow India to find a way to avoid relying on just one country or market, and also gives India an opportunity to enter into the Global Value Chain (GVC). In addition to GVC integration, CEPAs also support both government efforts to increase the Make in India, and Atmanirbhar Bharat initiatives.
CEPAs are a forward-looking trade policy tool that support India becoming a global economic power. A CEPA combines trade liberalisation, regulatory cooperation, and investment facilitation to create sustainable economic engagement as opposed to a pure transactional trade agreement. As India continues to negotiate and implement more CEPAs, they will be a vital part of India’s international trade and investment diplomacy.
Hritvik Gupta is a legal writer and researcher associated with LEGALLANDS LLP, where he contributes analytical and research-driven articles on corporate governance, international trade laws, and policy reforms. His writing reflects a deep understanding of evolving legal frameworks and their impact on cross-border commerce and regulatory compliance.
Hritvik’s work bridges practical legal insight with emerging global regulatory trends, offering readers a balanced perspective that combines academic depth with real-world application. He takes a keen interest in the intersection of law, technology, and international policy, contributing to the discourse on how businesses and governments can adapt to dynamic legal environments.
Through his contributions to Legallands.com, Hritvik aims to make complex legal developments more accessible, insightful, and relevant to businesses, professionals, and policymakers operating in an increasingly interconnected world.
