India is likely to sign the first bilateral free trade deal with the United Arab Emirates (UAE) during a virtual summit on Friday, with adequate protections for domestic industry. India is currently negotiating roughly a half-dozen free-trade accords.
According to three persons familiar with the situation, the comprehensive economic cooperation agreement (CEPA) with the UAE will include terms protecting domestic sectors' interests and giving them a conduit to markets in West Asia and Africa.
The Ministry stated, “Negotiations for CEPA were launched in September 2021 and have been completed,” the external affairs ministry said in a statement announcing the virtual summit between Prime Minister Narendra Modi and Abu Dhabi’s Crown Prince, Sheikh Mohamed bin Zayed al Nahyan. “The agreement will take India-UAE economic and commercial engagement to the next level. [The] UAE is India’s third-largest trade partner, and bilateral trade and investment ties are expected to see significant enhancements.”
India is negotiating free trade agreements (FTAs) with the United Kingdom, Australia, the European Union (EU), Canada, and Israel, all of which have negative lists of commodities for which there will be minimal or no tariff benefits. This would be done to defend the domestic industry's interests, according to the three persons, who asked to remain anonymous.
According to one of the persons, the CEPA with the UAE will be the second major trade agreement after the CECPA between India and Mauritius, which was signed in February 2021. “The India-UAE agreement is of strategic significance for both partners. We see a potential of $100 billion in bilateral trade in five years. It is a win-win for both,” he added. Modi and Sheikh Mohamed bin Zayed are scheduled to spell out their vision for bilateral relations during the virtual summit, which takes place at a time when India is commemorating its 75th anniversary of independence and the UAE is commemorating its 50th. According to the foreign affairs ministry, the leaders will also address bilateral cooperation as well as regional and international concerns.
During the epidemic, both countries worked closely together in the key areas of healthcare and food security.
The Federation of Indian Export Organizations (FIEOdirector )'s general and CEO, Ajay Sahai, said: “The UAE is India’s second-largest export destination, next only to the US and the growth of our exports to the UAE has been very encouraging. In the first nine months of the current financial year, our exports to the UAE have already crossed $25 billion.”
The trade balance, according to government data, is skewed in favor of the UAE, with imports (India buys a lot of crude oil from the UAE) exceeding $43 billion in January-December 2021.
According to Sahai, the CEPA will help Indian exporters gain better access to other Gulf Cooperation Council markets because they follow the same technical standards as the UAE. “The UAE is also a re-distribution centre and a financial hub. Much of the exports to Africa are routed through Dubai,” he explained.
It could also benefit India's jewelry exports. "The UAE is a gateway to the Middle East," said Colin Shah, head of the Gem and Jewellery Export Promotion Council. "The planned repeal of the UAE's 5% import charge will lead to increasing wealth on both sides of the Arabian Sea."
In 2015, 2018, and 2019, Modi visited the UAE, while the Crown Prince of Abu Dhabi visited India in 2016 and 2017.
Ministerial visits between the two countries have also continued, with the External Affairs Minister visiting the UAE three times and the Commerce and Industry Minister visiting the UAE in 2021. Over 3.3 million Indians live in the UAE, contributing significantly to total cultural and people-to-people links between the two countries.
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