India has kept sensitive dairy products out of the purview of its free trade agreement (FTA) with the UAE and pledged phased reduction of tariffs on certain key farm and food items, mainly meat, to safeguard the interests of domestic players.
The details of the India-UAE Comprehensive Economic Partnership Agreement (CEPA) show New Delhi, which taxes bovine meat and chicken imports at 30%, will trim the duty to 27% in the first year of the FTA, followed by a phased reduction of 300 basis points each year until it reaches 15%.
Buffalo meat alone contributed about $2.8 billion to India’s farm export kitty until January this fiscal. Of course, in some other meat segments where it’s not a big player, the duties will be abolished immediately.
A broad range of dairy products, including milk, yogurt, butter, ghee and cheese, which typically attract duties of 30-60%, are excluded from the ambit of the agreement. The fact that New Delhi didn’t grant concession to the UAE, which isn’t a large dairy player (unlike Australia), suggests the sensitivity it attaches to the dairy sector that was at the forefront of opposing a deal with the Beijing-dominated RCEP partners.
India will scrap a 20% duty for the UAE on gold jewellery, subject to a quantitative cap of 2.5 tonnes annually in five years.
Both sides have also agreed to a separate document on pharmaceuticals to facilitate greater access of Indian products, including automatic registration and marketing authorisation, in 90 days for several items that meet specified criteria.
According to the pact, the UAE will allow as many as 99% of Indian goods (in value terms) at zero duty in five years from about 90% in the first year. Similarly, India would allow duty-free access to 80% of goods from the UAE now and it would go up to 90% in ten years.
The UAE, however, has kept energy and energy-related services out of the purview of its commitments. Interestingly, for the first time, India has included a digital trade chapter in the FTA, unlike those that were signed in the past. This suggests India is willing to discuss prospects in such emerging areas bilaterally.