Textiles, pharmaceuticals and engineering push for great market access under India-UAE CEPA
With the first shipment of goods under the India-UAE Comprehensive Economic Partnership Agreement (CEPA) launched on May 1, 2022 – after the trade deal comes into force – it will only be not as usual for India and its industry, as great avenues are opening up to increase exports, become more competitive in the international market and connect to global value chains as well as a market of 10 million people in the UAE.
The entry into force of CEPA effectively grants India preferential market access provided by the UAE on more than 97% of its tariff lines, which account for 90% of India’s exports to the UAE by value.
There is now immediate zero-duty market access covering labor-intensive sectors such as textiles, engineered goods, gemstones and jewellery, pharmaceuticals and medical devices, plastics, automobiles, leather and footwear, agricultural products, furniture, wood products and sporting goods.
Going forward, there will be zero tariffs within five to 10 years on an additional 9% of India’s trade value for electronics, chemicals and petrochemicals, stoneware, cement, ceramics and machinery. For the country as a whole, CEPA with the UAE offers an opportunity to exponentially grow the value of two-way merchandise trade to over $100 billion from the current $60 billion over the next five years.
The trade deal with the UAE also comes at a good time for India with a record of $670 billion in exports (goods and services), constituting 22-23% of GDP, established in the last fiscal year. While the world sees India as a reliable partner, the CEPA with the UAE positions India favorably as it negotiates FTAs with the UK, Canada and the EU.
With the deal in place, India expects to gain in terms of an expanded footprint for its goods and the UAE as a gateway to the world will open doors to important markets for the rest of the Middle East, parts of Africa and Europe.
“The FTA will lead to exponential growth of India’s exports to the UAE and will also open the market to other Gulf Cooperation Council countries as GCC countries also follow the same technical standards as applicable. in the United Arab Emirates, paving the way for better market access for Indian products in the GCC market”, underlines A Sakthivel, President of the Federation of Indian Export Organizations.
“This can be used as a model for similar agreements with GCC countries,” he added.
According to the head of the FIEO, since the UAE is also a center of redistribution and a financial hub, a large part of the exports to Africa passes through Dubai. The signing of the FTA will encourage the establishment of warehousing/distribution centers in the UAE for exports to Africa.
“Many African buyers come to Dubai and place orders from there, so showcasing Indian products in the UAE will be a very good strategy to market our products and services in the African continent,” says Sakthivel.