India-UAE Trade Pact (CEPA) – UPSC GS2

India and the United Arab Emirates (UAE) signed a Comprehensive Economic Partnership Agreement (CEPA).

The trade deal is set to benefit almost 90 per cent of trade, both exports and imports, between the two countries.

The India-UAE CEPA would have strong anti-dumping measures.

The trade deal has also provided a permanent safeguard mechanism to safeguard exporters and businesses from any unwarranted surge in volumes of any particular product.

India has given duty concessions on gold exported from the UAE, while Indian exporters will attract zero percent duty on jewellery.

Indian Exports: India’s major exports to the UAE include petroleum products, precious metals, stones, gems and jewellery, minerals, food items such as cereals, sugar, fruits and vegetables, tea, meat, and seafood, textiles, engineering and machinery products, and chemicals.

Indian Imports: India’s top imports from the UAE include petroleum and petroleum products, precious metals, stones, gems and jewellery, minerals, chemicals and wood and wood products.

UAE investments in India: UAE’s investments in India are concentrated mainly in five sectors: Services Sector (15.78%), Sea Transport (8.80%), Power (8.34%), Construction (Infrastructure) Activities (7.15%) and Construction Development: (7.08%). UAE is also investing in a post-Article 370 Jammu and Kashmir, thereby helping to strengthen India’s position on Kashmir.

Boost to other FTAs: The signing of the pact with the UAE would also help to step up India’s proposed free trade agreements with Saudi Arabia, Bahrain, UK, Qatar, Kuwait and Oman.

Benefits to gems and jewellery sector: The deal will push jewellery exports to UAE to the level of $10 billion by 2023.

Greater Market for Indian Goods: India hopes to gain greater market access in the UAE for items such as textiles & apparels, agriculture and processed food, electronics, gems & jewellery, chemicals & pharmaceuticals and engineering goods.

Reduced import duties: The biggest advantage is that import duties will be brought down on all items exchanged between the two nations.

Duty free exports: At least 80 percent of India’s exports into the UAE will be duty free due to the free trade agreement.

Employment generation: The agreement will also create 5 lakh jobs in India in gems and jewellery, textiles, engineering, pharma and auto sectors, among others. In the UAE, the pact is expected to create over 1 lakh jobs in the next few years.

Wide coverage of Sectors: CEPA is also likely to include areas such as digital trade, intellectual property rights, government procurement etc. The two sides are also strengthening their cooperation in new areas of renewable energy, start-ups, fintech, etc.

Strengthened Air bubble: The Air Bubble agreed in August 2020 has helped several Indians to return back for employment and business. This deal will further strengthen this cooperation.