Expectations of a significant calibration in the trade and economic ties between India and the UAE are building up as the countries head towards signing a Comprehensive Economic Partnership Agreement (CEPA) during a virtual summit on Friday between Prime Minister Narendra Modi and Crown Prince of Abu Dhabi and Deputy Supreme Commander of UAE Armed Forces Sheikh Mohamed bin Zayed al Nahyan.
"The India UAE virtual summit on 18 February is an important event. India and the UAE have deepened and transformed their bilateral ties significantly over the past few years. We have made substantial progress on some aspects of the free trade agreement," MEA spokesperson Arindam Bagchi toldon the expected outcome of the summit.
A major initiative in bilateral relations is the negotiations for CEPA which were launched in September 2021 and have been completed. The agreement will take India-UAE economic and commercial engagement to the next level. UAE is India's third-largest trade partner, and bilateral trade and investment ties are expected to see significant enhancements.
The sentiment is endorsed by the Director-General and CEO of the Federation of Indian Export Organisations (FIEO) Ajai Sahai who pointed out the rich prospects which will open up for India's trade and export sector by the signing of the first such bilateral pact with the UAE.
"Growth of our exports to the UAE has been very encouraging. In the first nine months of the current financial year, our exports to the UAE have already crossed $25 billion," Sahai said, adding that in the calendar year of 2020 (January to December), exports with the UAE were USD 18 billion and in the same calendar period of 2021 it reached USD 25.4 bn, a growth of 41 per cent, added.
According to Sahai, India is expected to get market access for products like steel, engineering products, textiles, footwear, agricultural items, processed food, electronics and electrical goods. Currently, for most products, the tariff is 5 per cent and for steel, it is a high 10 per cent.
"So if the FTA paves way for bringing it down from 5 to zero, we will get a big advantage in competing effectively with the least developing countries who have FTA with UAE," added Sahai.
More importantly, he points out, UAE is a gateway to the Gulf region and the FTA will facilitate greater access for Indian exports to other Gulf Cooperation Council markets as businesses come to UAE to place orders. "The UAE is also a re-distribution centre and a financial hub. Much of the exports to Africa are routed through Dubai," he told ANI.
The gem and jewellery trade in India is expecting that the imminent FTA with UAE would help the industry to take a bigger leap in exports of plain gold and gold studded jewellery which was hit badly during the pandemic. The FTA can potentially boost India's jewellery exports to USD 10 billion to UAE.
"UAE accounts for 80 per cent of India's plain gold jewellery exports and 20 per cent of studded jewellery exports. The FTA between India and UAE has come at an opportune time when both countries are looking to rebound from the Covid-19 setback and recalibrate and realign their common business interests, including gold and diamonds. UAE is a gateway to the entire Middle East region and the proposed abolition of 5 per cent import duty in UAE would lead to increased prosperity on both sides of the Arabian Sea," said Colin Shah, Chairman of the Gems and Jewellery Export Promotion Council.
In recent years, bilateral relations between India and the UAE have strengthened in all areas, and both sides have embarked upon a comprehensive strategic partnership. Both sides have collaborated closely during the Covid-19 pandemic in critical areas of healthcare and food security. The two sides are also strengthening their cooperation in new areas of renewable energy, start-ups, fintech, etc. India is participating with one of the largest pavilions in the Dubai Expo 2020.
( With inputs from ANI )
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