INDIA UAE BILATERAL TRADE
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- On the occasion of the first anniversary of the implementation of the India-UAE Comprehensive Economic Partnership Agreement (CEPA), Commerce Secretary talked about CEPA’s role as a growth engine for India-UAE bilateral trade over the past 11 months.
What is CEPA?
- CEPA is a full and deep Agreement signed in February 2022, during a virtual summit between the Prime Minister of India and President of the UAE. CEPA entered into force from 01 May 2022.
- Under the India-UAE CEPA in the Goods Domain, the UAE eliminated duties on 97.4% of its tariff lines corresponding to 99% of imports from India.
- India has obtained immediate duty elimination on over 80% of its tariff lines corresponding to 90% of India’s exports in value terms.
- Most of these tariff lines correspond to the labour-intensive industries/sectors such as oil seeds & oils, beverages, cotton, fish & fish products, textiles, clothing, gems and jewellery, leather, footwear, pharmaceuticals and many engineering products.
- In the Services Domain, broader and deeper commitments have been taken across all the sectors and modes of supply. Out of the 160 services subsectors, India has offered 100 sub-sectors to the UAE and the UAE has offered 111 sub-sectors to India.
Contribution to trade
- The Bilateral Trade between India and the UAE has touched historic highs during FY 2022-23.
- Trade has increased from US$ 72.9 billion (Apr 21-Mar 2022) to US$ 84.5 billion (Apr 22-Mar 2023) registering a year-on-year increase of 16%.
- During the CEPA Implementation period (from May 22 to Mar 23), bilateral trade increased from US$ 67.5 billion (May 21-Mar 2022) to US$ 76.9 billion (May 22-Mar 2023) – an annual increase of 14%.
- During April-March period, Indian exports to the UAE increased from US$ 28 bn to US$ 31.3 bn; an increase of around US$ 3.3 billion; or 8% year-on-year growth in percentage terms.
- During the CEPA Implementation period, India’s exports to the UAE increased from 26.2 billion (May 21 – March 22) to 28.5 billion (May 22 – March 23); an 5% y-o-y growth.
- India’s Imports from the UAE have grown to USD 53.2 billion (an annual increase of 18.8%) during Apr 22 to Mar 23. Non-oil imports during the same period grew by 4.1%.
- Some of the key sectors, including labour-intensive sectors have witnessed significant export growth on account of the CEPA.
- India and UAE have shared trade links through the centuries.
- The trade, which was dominated by traditional items such as dates, pearl and fishes, underwent a sharp change after the discovery of oil in UAE (oil exports begun from Abu Dhabi in 1962).
- With the emergence of UAE as a unified entity in 1971, exports from India started growing gradually over the years.
- The real impetus, however, started after Dubai positioned itself as a regional trading hub by early 1990s and about the same time, the economic liberalization process started in India.
- UAE was India's third largest trading partner for the year 2021-22 after US and China.
- Moreover, UAE is the second largest export destination of India (after US) with an amount of over US$ 28 billion for the year 2021-22.
- For UAE, India is the second largest trading partner for the year 2021 with an amount of around US$ 45 billion (non-oil trade).
India's Major Exports and Imports to the UAE
- India's major export items to the UAE are: Precious Metals, Stones, Gems & Jewellery, Minerals & Refined Petroleum Products, Food Items (Cereals, Sugar, Fruits & Vegetables, Tea, Meat, and Seafood), Textiles (Garments, Apparel, Synthetic fibre, Cotton, Yarn) and Engineering & Machinery Products and Chemicals.
- India's major import items from the UAE are: Petroleum and Petroleum Products, Precious Metals, Stones, Gems & Jewellery, Minerals, Chemicals, Wood & Wood Products.
- The UAE’s investment in India is estimated to be around US $ 20-21 billion of which US 15.18 billion is in the form of FDI while the remaining is portfolio investment.
- UAE is the 7th biggest investor in India in terms of FDI.
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Q) CEPA has made a significant impact on India’s Bilateral Trade with the UAE especially India’s Exports to the UAE. Elaborate. (250 words)