The India-UAE Comprehensive Economic Partnership Agreement (CEPA), a novel type of free trade arrangement aimed at fostering economic cooperation and facilitating trade negotiations, has just finished its first year in operation. This article will delve into the specifics of the CEPA, explore its implications for India-UAE relations, and discuss the impacts it’s had on shared trade ties.
Understanding the Comprehensive Economic Partnership Agreement (CEPA)
CEPA is a distinctive kind of trade agreement that not only includes negotiations on trade in services and investment but extends to other avenues of economic partnership as well. The scope of this agreement is more comprehensive than conventional free trade agreements, considering areas such as trade facilitation, customs cooperation, and intellectual property rights (IPR). By integrating the regulation aspect of trade, CEPA goes beyond basic trade agreements by addressing regulatory issues.
Specifics of the India-UAE CEPA
The India-UAE CEPA, which was put into effect on May 1, 2022, symbolizes a monumental free trade agreement (FTA) between India and the UAE. It encompasses trade in goods, services, investment, and other forms of economic collaboration. Within just five years since its inception, the agreement is expected to enhance the total value of bilateral trade to over USD 100 billion and trade in services to over USD 15 billion. It’s noteworthy that this is the first comprehensive FTA signed by India with any country in the past decade.
Key Features of the CEPA
The CEPA offers preferential market access for over 80% of products traded between India and the UAE. In sectors like gems and jewellery, textiles, agriculture, engineering and more, India is slated to profit from the tariff reductions or eliminations on its exports to the UAE. It also covers 11 broad service sectors offering enriched market accessibility for service providers on both sides. The agreement further promotes a liberal, non-discriminatory regime for cross-border investment between both countries, with provisions for dispute settlement and cooperation on investment facilitation.
India-UAE Trade Relations
The UAE is India’s third-largest trading partner, with a bilateral trade turnover of US$ 68.4 billion in 2021. Ranking seventh as an investor in India, the UAE saw cumulative FDI inflows amounting to US$ 15,179 million from April 2000 – September 2022. Key exports from India to the UAE include petroleum products, gems and jewellery, machinery, chemicals, textiles, cereals, meat, among others. Major imports from the UAE encompass crude oil, gold, pearls and precious stones, metal ores and scrap, chemicals, and electrical machinery.
Impact of India-UAE CEPA on Trade Relations
During FY 2022-23, bilateral trade soared to unprecedented heights, registering a 16% increase from USD 72.9 billion to USD 84.5 billion. Similarly, Indian exports to the UAE experienced an 11.8% year-on-year surge, growing from USD 28 billion to USD 31.3 billion. Various sectors witnessed significant export growth, including mineral fuels, electrical machinery, gems and jewellery, automobiles, essential oils and cosmetics, other machinery, cereals, and chemical products.
With the successful completion of its first year, the India-UAE CEPA has already begun showing promising signs of enhancing trade relations and fostering economic partnership between the two nations.
