The Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates (UAE) has been a topic of international trade corridors for some time now. The agreement came into force on May 1st, allowing duty-free access to the Emirates for 90 percent of the country's exports.
Officials of the commerce and industry ministries of both countries deem this as a welcome step. The first consignment of goods from India to the UAE was flagged off under the pact earlier in May, underscoring the immense trade potential both countries plan on exploring.
How Will This Benefit the Nations?
Per media reports, the CEPA will usher in a new era of trade high for both counties. The CEPA is likely to benefit about $26 billion worth of Indian products that are currently subjected to 5% import duty by the UAE, India’s third-biggest trading partner behind the US and China.
Ajay Sahai, director general, Federation of Indian Export Organizations (FIEO), was quoted saying, “we expect exports to go up to $40 billion this year from around $26 billion last year, led by labor-intensive sectors such as gems and jewelry.”
What Does the Partnership Mean for Both Parties?
With the partnership, India is expected to benefit from preferential market access provided by the UAE on over 97% of its tariff lines, which account for 99% of Indian exports to the UAE in value terms. This is especially applicable for all labor-intensive sectors such as gems and jewelry, agricultural and wood products, textiles, leather, footwear, sports goods, plastics, furniture, engineering products, medical devices, and even automobiles.
The Experts Speak
According to Sahai, India's $250 million in pharma exports to the UAE could see a significant increase because both parties have agreed to a separate Annex on pharmaceuticals to facilitate access to Indian pharmaceuticals products, particularly automatic registration and marketing authorization in 90 days for products meeting specified criteria.
On February 18th, India and the UAE signed CEPA, with the goal of increasing bilateral commerce to $100 billion over five years, up from $60 billion today. The bilateral trade deal is India's first in the area and the country's first comprehensive trade accord in a decade.
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