The UAE-India Free Trade Agreement (FTA) is a game-changer

The impending UAE-India Free Trade Agreement (FTA) is expected to bring enormous benefits to the Gulf region as well as the rest of the world. Both countries, sharing historic relations and cultural similarities, had been focusing on strengthening their mutual trade relationship for quite a while. The result is a game-changing Comprehensive Economic Partnership Agreement (CEPA), which could be the first FTA signed by India in more than 10 years. Also, I believe it’s one of the fastest negotiated bilateral FTAs between two sovereign nations ever.

The UAE-India: A new chapter!

Under the latest FTA between the two nations, duty concessions are expected for over 1,000 Indian products⁽¹⁾, including but not limited to leather, gems and jewellery, engineering goods, spices, textiles and garments, chemicals, and poultry. On the other hand, the UAE has proposed relaxed duty on its signature food items entering the Indian market. These include confectionery and dates, among other things.

The United Arab Emirates was already the third-largest export destination for India. However, the former had added a significant 5% duty on jewellery, textiles, and garments. Certain types of steel products from the country were even being taxed at 10%. The Comprehensive Economic Partnership Agreement (CEPA) is set to change that.

During the fiscal year 2020-21 (FY21), the above-mentioned segments accounted for 34% of India’s exports to the UAE. In pre-pandemic FY20, that figure stood at 43%. The total value of Indian exports to the Gulf nation at the end of FY21 was just under USD 17 billion. This is set to increase massively once CEPA comes into effect.

India’s major exports to the Emirates include textiles and garments, petroleum products, stones, food items, gems and jewellery, engineering goods, precious metals, and chemicals. Conversely, the UAE exports wood products, chemicals, precious metals, dates and confectionery, and valuable stones to the South Asian nation. Under CEPA, the Indian government has also actively sought the removal of poultry exports from the UAE’s list of banned trading products. I’m glad to hear the latest reports that the UAE has obliged⁽²⁾, and that the ban on Indian poultry has been lifted. Authorities have agreed to demonstrate compliance with the health and safety protocols stipulated by the World Organization for Animal Health.

Massive economic opportunity for both countries

The new FTA is expected to grow merchandise trade between UAE and India to USD 100 billion in 5 years. For bilateral services trade, the aim is to hit the USD 15 billion mark. Leaders of both countries are also on the same page with regard to the free movement of skilled professionals. To facilitate that, labour-intensive sectors are being given special attention. I believe this emphasis will considerably increase employment opportunities in both nations.

Plans are also in the offing for an India Mart Traders Market in Dubai’s Jebel Ali Free Zone⁽³⁾, a leading international free trade area. This dedicated space will provide Indian manufacturers, traders, and entrepreneurs with direct access to the local UAE market. For Indian authorities, UAE could prove to be a springboard to tap into the limitless potential of GCC (Gulf Cooperation Council) and African markets. Leaders from both sides seem to have their sights set firmly on turning their respective countries into highly sought-after skill hubs. For this purpose, cooperation in skill development and technology advancement is being prioritized as part of the agreement.

There is a growing understanding that the UAE and India can work well together and bring forth the next generation of unicorn startups for the world. In 2021, as many as 33 Indian startups achieved unicorn status⁽⁴⁾, next only to China and the US. I was glad to see Indian representatives touch upon the successes of new unicorns at the dedicated Pavilion during Expo 2020 Dubai.

Having almost split the entirety of my life between India and the UAE, it fills me with joy to hear the imminent FTA between both nations. My kudos to the leadership of both the nations and the authorities involved in the discussions for making this happen. Their contributions will be remembered through generations.