India-UAE Comprehensive Economic Partnership Agreement

The India-United Arab Emirates (UAE) Comprehensive Economic Partnership Agreement (CEPA) marks milestone in bilateral relations, celebrating three years since its signing on 18th February 2025. This agreement, established during a virtual summit between Prime Minister of India Narendra Modi and UAE President Sheikh Mohamed bin Zayed Al Nahyan, came into effect on 1st May 2022. CEPA aims to enhance economic cooperation and diversify trade between the two nations.

Trade Growth Post-CEPA

Since the implementation of CEPA, bilateral merchandise trade has seen remarkable growth. It surged from USD 43.3 billion in FY 2020-21 to USD 83.7 billion in 2023-24. The current fiscal year (April-December 2024) recorded trade reaching USD 71.8 billion. This growth reflects the successful diversification of the trade basket, with non-oil trade accounting for over half of total trade, reaching USD 57.8 billion in FY 2023-24.

Non-Oil Trade Targets

The agreement has set ambitious targets for non-oil trade, aiming to achieve USD 100 billion by 2030. As of FY 2023-24, India’s non-oil exports to the UAE reached USD 27.4 billion, showcasing an average growth of 25.6% since CEPA’s inception. Key sectors contributing to this growth include refined crude oil products, gems and jewellery, electrical machinery, and high-technology goods.

Export Achievements

Smartphones have emerged as export item, with shipments valued at USD 2.57 billion in FY 2023-24. Other notable products include organic and inorganic chemicals. The issuance of approximately 240,000 Certificates of Origin has facilitated exports totalling USD 19.87 billion to the UAE since CEPA came into force.

Institutional Mechanisms

To ensure the effective implementation of CEPA, both governments have established a Joint Committee that meets regularly. The Trade in Goods Committee has convened multiple times to address bilateral trade issues. This collaborative approach has encourageed mutual trust and cooperation, allowing for the operationalisation of various sub-committees focused on trade in services, customs procedures, and trade facilitation.

Bharat Mart Initiative

The launch of the Bharat Mart initiative in Dubai represents step forward. It serves as a one-stop shop for Indian manufacturers to showcase their products globally. This initiative aims to enhance export opportunities for Indian businesses and strengthen economic ties between India and the UAE.

Impact on Employment and MSMEs

CEPA has transformed the economic landscape for both nations, empowering micro, small, and medium enterprises (MSMEs). It has generated employment opportunities and created new business avenues, reinforcing the commitment of both countries to elevate their economic partnership.

Future Prospects

India and the UAE are dedicated to further enhancing their economic collaboration. The ongoing efforts to leverage CEPA promise to unlock new trade opportunities and strengthen diplomatic ties, paving the way for a robust economic future.

Questions for UPSC:

1. Critically analyse the impact of the India-UAE Comprehensive Economic Partnership Agreement on bilateral trade dynamics.
2. What are the key sectors driving the growth of non-oil trade between India and the UAE? Discuss with examples.
3. Estimate the potential challenges that may arise in achieving the USD 100 billion non-oil trade target by 2030.
4. Point out the role of MSMEs in the economic partnership between India and the UAE under CEPA.

Answer Hints:

1. Critically analyse the impact of the India-UAE Comprehensive Economic Partnership Agreement on bilateral trade dynamics.

1. Bilateral merchandise trade increased from USD 43.3 billion in FY 2020-21 to USD 83.7 billion in 2023-24.
2. Non-oil trade reached USD 57.8 billion, accounting for over half of total trade, indicating successful diversification.
3. CEPA facilitated the issuance of 240,000 Certificates of Origin, enabling exports worth USD 19.87 billion.
4. Regular meetings and committees have encourageed cooperation and addressed trade issues effectively.
5. The Bharat Mart initiative enhances export opportunities for Indian manufacturers, promoting further trade growth.

2. What are the key sectors driving the growth of non-oil trade between India and the UAE? Discuss with examples.

1. Refined crude oil products and gems & jewellery are contributors to non-oil trade.
2. Electrical machinery and high-technology goods like boilers and generators are also major export items.
3. Smartphones have emerged as a key export product, with shipments valued at USD 2.57 billion in FY 2023-24.
4. Organic and inorganic chemicals play an important role in the trade dynamics as well.
5. The diversification of these sectors reflects the broader goals of CEPA to enhance economic cooperation.

3. Estimate the potential challenges that may arise in achieving the USD 100 billion non-oil trade target by 2030.

1. Global economic fluctuations may affect trade volumes and demand for goods.
2. Trade barriers and regulatory challenges could hinder smooth export processes.
3. Supply chain disruptions, exacerbated by geopolitical tensions, may impact trade efficiency.
4. Competition from other nations in similar sectors could limit market share in the UAE.
5. Coordination between various stakeholders in both countries may face bureaucratic hurdles.

4. Point out the role of MSMEs in the economic partnership between India and the UAE under CEPA.

1. CEPA empowers MSMEs by providing access to new markets and export opportunities.
2. It encourages innovation and competitiveness among smaller enterprises in both countries.
3. MSMEs contribute to job creation, enhancing employment prospects in both economies.
4. Initiatives like Bharat Mart specifically support MSMEs in showcasing products globally.
5. The collaboration under CEPA strengthens the overall economic framework, benefiting MSMEs .