India signed its first free trade agreement (FTA) in over a decade, as it signed the Comprehensive Economic Partnership Agreement (CEPA) with the UAE. Both countries have pledged to boost bilateral trade to $ 100 billion in five years, from about $ 60 billion now.
India will gain greater duty-free market access in many labour-intensive sectors, such as gems & jewellery, textiles & garments, leather and farm products. It will also have market access to pharmaceuticals and engineering goods, among others.
Similarly, the UAE will have easier access to India’s metal, minerals and petroleum sectors. About 90% of India’s goods exports to the UAE are likely to be covered by the FTA. It will help create about a million jobs in India.
The CEPA was signed by commerce and industry minister Piyush Goyal and UAE’s minister of economy Abdulla bin Touq Al Marri at a virtual summit attended by the Prime Minister and Crown Prince of Abu Dhabi Sheikh Mohammed bin Zayed Al Nahyan. Both the sides will now initiate due processes of ratification in the coming weeks.
India had identified more than 1,000 products across sectors, including gems & jewellery, textiles & garments, leather, spices, engineering goods, chemicals and poultry, where it wanted duty concessions from the UAE under the FTA. Both the sides started formal negotiations from September 23 last year.
While the UAE, India’s third-largest export destination, currently imposes a 5% duty on textiles & garments and jewellery, certain steel products are taxed at 10%. These three segments alone made up 34% of India’s $16.7-billion exports to the UAE last fiscal and 43% in the pre-pandemic year of FY20.
For its part, Abu Dhabi, too, has sought duty concession across broad range of products, including in food items such as dates and confectionary. The FTA envisages several partnerships across sectors. It proposes investment zone in India for UAE firms and a dedicated India Mart in Jebel Ali Free Zone. Both the sides pledge to create opportunities for Indian investors in advanced industrial technology zones in Abu Dhabi, with focus on logistics, pharma, medical devices, agri, steel and aluminium.