The Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates (UAE) came into effect in May 2022. Two months after its implementation, India’s gold jewellery exports to the UAE witnessed a staggering rise of 42%. Furthermore, overall exports to the UAE in the months of May and June 2022 amounted to USD 5.4 billion, marking a 17% annual growth.
The Impact of CEPA on Jewellery Exports
Prior to the implementation of CEPA, Indian exporters of gold jewellery faced stiff competition from countries like Turkey, leading to declining exports. The free trade pact, however, changed this scenario by offering zero duty access on jewellery to the Gulf nation, thereby benefiting exports significantly. Pre-CEPA, Indian jewellery exports attracted 5% duty. Zero duty access paves the way for the potential entry of Indian products in the North African, West Asian, and Central Asian markets. Additionally, India conceded a 1% duty concession on gold imports from the UAE up to 200 tonnes of shipments under CEPA.
Potential Benefits of India-UAE CEPA
The benefits of the India-UAE CEPA extend beyond the jewellery sector. Here are the potential advantages in various sectors:
In Trade-in Goods
India is set to benefit from preferential market access provided by the UAE, particularly for labour-intensive sectors such as gems and jewellery, textiles, leather, sports goods, footwear, plastics, furniture, agricultural products, wood products, engineering products, medical devices, and automobiles.
In Trade-in Services
Both India and the UAE have mutually offered market access to broad service sectors including business services, communication services, construction and related engineering services, distribution services, educational services, environmental services, financial services, health-related and social services, tourism and travel-related services, recreational cultural and sporting services, and transport services.
In Trade-in Pharmaceuticals
In addition to goods and services, both countries have agreed to facilitate access to Indian pharmaceuticals products, encompassing automatic registration and marketing authorisation within 90 days for products meeting specified criteria.
About CEPA
The Comprehensive Economic Partnership Agreement (CEPA) is a type of free trade pact that covers negotiations on trade in services and investment, along with other areas of economic partnership. This might also include negotiations in areas such as trade facilitation and customs cooperation, competition, and Intellectual Property Rights (IPR). CEPA surpasses the scope of Free Trade Agreements by looking into the regulatory aspect of trade and incorporating an agreement covering these regulatory issues. India has previously signed CEPA with nations like South Korea and Japan.
Other Types of Trade Agreements and India’s Role
India has engaged in various forms of trade agreements with several countries and trading blocs, including Free Trade Agreement (FTA), Preferential Trade Agreement (PTA), Comprehensive Economic Cooperation Agreement (CECA), Bilateral Investment Treaty (BIT), and Trade and Investment Framework Agreement (TIFA).
India has negotiated FTAs with many nations and trading blocs, like Sri Lanka and the Association of Southeast Asians Nations (ASEAN). The Regional Comprehensive Economic Partnership (RCEP) is an FTA between the ten member states of ASEAN and five other countries (Australia, China, Japan, South Korea, and New Zealand) with which ASEAN has existing FTAs.
India has signed a PTA with Afghanistan, where two or more partners give preferential entry rights for certain products by reducing duties on an agreed number of tariff lines. A CECA, which generally covers negotiation on trade tariffs and Tariff Rate Quotas (TRQ) rates, has been signed by India with Malaysia. India participated in a BIT, where two countries decide conditions for private investments by citizens and firms of the two countries. Lastly, the TIFA establishes a framework for expanding trade and resolving outstanding disputes between countries.
The overarching aim of these agreements is to stimulate economic cooperation, promote foreign investments and facilitate trade relations, thereby strengthening the country’s economy.