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UAE-India Comprehensive Economic Partnership Agreement

WHY IN NEWS?

  • Both India and UAE are celebrating the second year of the signing of the Comprehensive Economic Partnership Agreement (CEPA) between them.

WHAT IS CEPA?

  • It is recognising the parties strong, historic, and developing relationship, the friendly ties that exists between their people, and wishing to strengthen these links through the creation of a free trade area, thus establishing close and lasting relations.
  • CEPA aims to establish a clear, transparent, and predictable legal framework that supports further expansion of trade.
  • Both the parties are determined to strengthen their economic and trade relations for their mutual benefit through trade liberalisation in goods and services.

ABOUT INDIA- UAE CEPA:

  • Launched during a virtual summit, CEPA is a full and deep Agreement signed on 18 February 2022, 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.
  • It entered into force from 01 May 2022.
  • The CEPA is not merely a trade agreement but it is a blueprint for a multifaceted strategic relationship that intertwines commerce, investment, and cultural connections.
  • Some of the key sectors, including labour-intensive sectors, that have witnessed significant export growth on account of the CEPA include:
  1. Mineral Fuels;
  2. Electrical Machinery (particularly telephone equipment);
  3. Gems & Jewellery;
  4. Automobiles (Transport vehicles segment);
  5. Essential Oils/Perfumes/Cosmetics (Beauty/Skin care products);
  6. Other Machinery;
  7. Cereals (Rice); Coffee/Tea/Spices;
  8. Other Agri Products; and Chemical Products
  • Under the India-UAE CEPA in the Goods Domain, UAE had eliminated duties on 97.4% of its tariff lines corresponding to 99% of imports from India.
  • India has obtained immediate duty elimination on over 80% of its tariff lines corresponding to 90% of India’s exports in value terms.

ADVANTAGES OF INDIA-UAE CEPA:

The UAE-India CEPA entered into force on May 1, 2022. As a result of the agreement, businesses can now take advantage of many new benefits, including:

  • They can have greater access for UAE exports entering the Indian market through the reduction or removal of tariffs on more than 80 per cent of products.
  • Presence of an open and non-discriminatory environment for cross-border trade with India.
  • Enhanced market access for UAE’s service providers across 11 sectors and more than 100 sub-sectors.
  • It also provides for removal of unnecessary technical barriers (TBT) for UAE and Indian exporters.
  • It also provide support for UAE companies through a 10 per cent price preference in UAE government procurement tenders.
  • Assurance that UAE products will not be subject to India’s anti-dumping investigations as such products are merely transshipped.

IMPACT OF CEPA ON INDIA-UAE TRADE:

  • Taking adavntages of the reductions in trade tarifs, the exchange in goods such as minerals and fuels, automobiles, and gems and jewellery have witnessed remarkable growth.
  • India’s exports to the UAE has increased by 12 per cent, reaching $31.6 billion in 2022-23.
  • During the same period, growth in India’s global exports was 5.3%.
  • On the other hand excluding the UAE, India’s global exports grew at 4.8%.
  • CEPA has made a significant impact on India’s Bilateral Trade with the UAE and particularly India’s Exports to the UAE (Oil and Non-Oil).
  • The Bilateral Trade between India and the UAE has reached historic highs during FY 2022-23.
  • Trade has increased from US$ 72.9 billion (Apr 21-Mar 2022) to US$ 84.5 billion (Apr 22-Mar 2023) registering a y-o-y increase of 16%.
  • During the CEPA Implementation period (from May 22 to Mar 23), bilateral trade increased from US$ 67.5 billion (May 21-Mar 2022) to US$ 76.9 billion (May 22-Mar 2023) – an annual increase of 14%.

WAY FORWARD:

  • The CEPA and the Council are example of the new pathways which are proceeding the UAE-India strategic partnership into the future.
  • We should also not underestimate the power of cultural exchange and people-to-people connections, despite economic gains are pivotal, and the role of our two business communities and governments remain central to ensuring the CEPA’s success.

The post UAE-India Comprehensive Economic Partnership Agreement appeared first on Vajirao IAS.

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