India-UAE trade goes off the charts as CEPA celebrates first anniversary

India-UAE trade goes off the charts as CEPA celebrates first anniversary
India-UAE trade goes off the charts as CEPA celebrates first anniversary

On May 1, 2023, India celebrated the first anniversary of the Comprehensive Economic Partnership Agreement (CEPA) implementation between India and the United Arab Emirates (UAE). The agreement signed on February 18, 2022, has been a milestone in the relationship between the two countries. CEPA has played a vital role in promoting bilateral trade between India and the UAE. This article aims to discuss the impact of CEPA on bilateral trade between India and the UAE and how it has helped increase India’s exports to the UAE.

CEPA – The Growth Engine for India-UAE Bilateral Trade

The India-UAE CEPA agreement was signed on February 18, 2022, during a virtual summit between the Prime Minister of India, Shri Narendra Modi, and His Excellency the President of the UAE and Ruler of Abu Dhabi, His Highness Sheikh Mohamed bin Zayed Al Nahyan. CEPA is a full and deep agreement, which entered into force from May 1, 2022.

Since the implementation of CEPA, it has been instrumental in promoting bilateral trade between India and the UAE. The Commerce Secretary, Shri Sunil Barthwal, congratulated both countries on the occasion of the first anniversary of CEPA’s implementation. He praised the agreement as a growth engine for India-UAE bilateral trade over the past 11 months.

CEPA Implementation and Ease of Doing Business

The India-UAE CEPA agreement has helped in improving the ease of doing business between the two countries. The two countries are continuously working together to further improve the ease of doing business.

Representatives from Industry mentioned leveraging CEPA to register significant growth in their respective sectors. CEPA has helped reduce trade barriers and has made the trading process more transparent and streamlined.

Impact of CEPA on India’s Bilateral Trade with the UAE

During the past year, CEPA has made a significant impact on India’s bilateral trade with the UAE. The bilateral trade between India and the UAE touched historic highs during FY 2022-23. The trade has increased from USD 72.9 billion (Apr 21-Mar 2022) to USD 84.5 billion (Apr 22-Mar 2023), registering a year-on-year increase of 16%.

During the CEPA implementation period (from May 22 to Mar 23), bilateral trade increased from USD 67.5 billion (May 21-Mar 2022) to USD 76.9 billion (May 22-Mar 2023), an annual increase of 14%.

Year/PeriodBilateral Trade (in USD billions)YoY GrowthIndian Exports to UAE (in USD billions)YoY Growth
FY 2022-2384.516%31.311.8%
CEPA Implementation period (May 22 to Mar 23)76.914%28.58.5%
Apr 22 to Mar 2353.218.8%N/AN/A
Note: Non-oil imports during Apr 22 to Mar 23 grew by 4.1%. India’s global exports during the same periods (excluding UAE) grew at 4.8% and 3.1% respectively.

Increase in India’s Exports to the UAE

Exports from India to the UAE have also registered a multiyear high. During the April-March period, Indian exports to the UAE increased from USD 28 billion to USD 31.3 billion, an increase of around USD 3.3 billion or 11.8% year-on-year growth in percentage terms.

During the same period, growth in India’s global exports was 5.3%. Excluding the UAE, India’s global exports grew at 4.8%.

Key Sectors Witnessing Growth due to CEPA

Several key sectors have witnessed significant growth due to CEPA. The sectors include:

  1. Gems and Jewelry: The gems and jewelry sector has been one of the key beneficiaries of CEPA. The UAE is one of the largest importers of gems and jewelry, and CEPA has helped in reducing trade barriers, making it easier for Indian businesses to export their products to the UAE.
  2. Pharmaceuticals: The pharmaceutical sector has also witnessed significant growth due to CEPA. The agreement has helped in reducing tariffs on Indian pharmaceutical products, making it easier for Indian companies to export their products to the UAE.
  3. Agriculture and Food: The agriculture and food sector has been another key beneficiary of CEPA. The agreement has helped in reducing trade barriers, making it easier for Indian businesses to export their agricultural and food products to the UAE.
  4. Engineering Goods: The engineering goods sector has also witnessed significant growth due to CEPA. The agreement has helped in reducing tariffs on Indian engineering products, making it easier for Indian companies to export their products to the UAE.

Utilization of India-UAE CEPA

According to a report by the Indian Embassy in Abu Dhabi, there has been a considerable increase in the utilization of CEPA in the past year. Indian businesses have utilized CEPA to export a variety of goods, including textiles, chemicals, plastics, and electronic products.

CEPA in the Goods Domain

Under CEPA, both India and the UAE have agreed to eliminate tariffs on several goods over the next ten years. This is expected to significantly increase bilateral trade between the two countries.

India’s Vision for the Future of Bilateral Trade

India aims to increase its bilateral trade with the UAE to USD 100 billion by 2025. The two countries are working together to achieve this target. India is also keen to explore new areas of cooperation with the UAE, including in the fields of renewable energy, healthcare, and infrastructure.

Challenges Ahead

Despite the progress made, there are several challenges that need to be addressed. One of the key challenges is the lack of awareness among Indian businesses about the benefits of CEPA. The Indian government and industry bodies need to work together to create awareness about the agreement and its benefits.

Another challenge is the lack of coordination between Indian and UAE customs authorities. This has led to delays in the clearance of goods, resulting in higher costs for businesses.

Opportunities

Ahead Despite the challenges, there are several opportunities for Indian businesses to expand their presence in the UAE. The UAE is a rapidly growing economy and offers significant opportunities for Indian businesses in several sectors, including oil and gas, construction, and infrastructure.

Conclusion

CEPA has been a game-changer for India-UAE bilateral trade. The agreement has helped in reducing trade barriers, increasing transparency, and streamlining the trading process. CEPA has also helped in increasing India’s exports to the UAE, with several key sectors witnessing significant growth. However, there are still several challenges that need to be addressed, and the Indian government and industry bodies need to work together to create awareness about the agreement and its benefits.

FAQs

What is CEPA?

CEPA stands for Comprehensive Economic Partnership Agreement. It is a full and deep agreement signed between India and the UAE to promote bilateral trade and investment.

When was CEPA signed and when did it come into force?

CEPA was signed on February 18, 2022, and it came into force on May 1, 2022.

What sectors are witnessing growth due to CEPA?

Several sectors, including agriculture, textiles, electronics, and food processing, are witnessing growth due to CEPA.

What is the impact of CEPA on India’s bilateral trade with the UAE?

CEPA has had a significant impact on India’s bilateral trade with the UAE, with the trade volume increasing by 16% in the first year of implementation.

How has CEPA helped in improving the ease of doing business between India and the UAE?

CEPA has helped reduce trade barriers and has made the trading process more transparent and streamlined, thus improving the ease of doing business between India and the UAE.

What is India’s vision for the future of bilateral trade with the UAE?

India aims to further increase bilateral trade with the UAE and explore new opportunities for cooperation in sectors such as energy, tourism, and infrastructure.

What are the challenges ahead for CEPA implementation?

Some of the challenges ahead for CEPA implementation include ensuring that the benefits of the agreement are evenly distributed and addressing concerns related to non-tariff barriers.

What are the opportunities ahead for CEPA implementation?

The opportunities ahead for CEPA implementation include exploring new areas of cooperation and enhancing trade and investment ties between India and the UAE.

How can businesses utilize the India-UAE CEPA?

Businesses can utilize the India-UAE CEPA by taking advantage of the reduction in tariffs and other trade barriers to increase exports and expand their presence in the UAE market.

What is the future of India-UAE bilateral trade?

The future of India-UAE bilateral trade looks bright, with both countries committed to further enhancing their economic ties and exploring new avenues for cooperation.

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