The year 2022 is a historic one for the UAE and India. On Friday, February 18, Indian Prime Minister, Narendra Modi and His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, signed a Comprehensive Economic Partnership Agreement (CEPA). Following the signing, PM Modi tweeted: "His Highness Mohamed Bin Zayed and I believe that the India-UAE CEPA signed today will be a game-changer in our economic ties."
The UAE and India have relished close economic and cultural ties for decades and the CEPA is a testament to the commitment of both countries to maintain and nurture these friendly ties. The CEPA has been a long time coming and seeks to build on the work done over the last few years.
Here are the highlights of the agreement:
Trade and business
The UAE is India’s third largest trading partner, whereas in terms of exports, India is UAE’s largest trading partner. The trade pact would result in a 5 per cent drop in import duty for Indian readymade garments in the UAE which will further strengthen the dominant position of Indian apparels in the region. It will also reduce import duties on majority of Indian exports to the UAE. Both countries will also collaborate on promoting e-businesses and e-payment solutions, owing to the ever-growing importance of these segments. The goal is to invite more investment opportunities in these sectors to help businesses, specifically start-ups, with smooth operations. Start-ups focusing on fintech, edu-tech, healthcare, logistics and supply chain, agritech, chip design and green energy are expected to benefit from the deal.
The deal also expects to increase the bilateral non-oil trade between the countries to $100 billion from the current $60 million over the next five years.
Piyush Goyal, minister of commerce and industry, India said that the deal will create at least one million job opportunities for youngsters. This will only add to the one million plus Indians already working in the UAE.
The countries have agreed to work closely to ensure that skilled labour requirements of the UAE are met by access to closely coordinated training programmes. This deal will result in substantial net gains for India in labour-intensive industries such as gems and jewellery, leather, furniture, wood products, and agriculture.
Since healthcare systems are of paramount importance post the Covid-19 pandemic, there has been an agreement to collaborate on research, production and development of reliable supply chains for vaccines and to enhance investments by the UAE entities in the rapidly growing health infrastructure in India. The leaders also agreed to collaborate in providing healthcare in underprivileged countries.
In August 2021, the two countries signed an agreement for faculty members from Indian institutes to spend six to ten months every year for research and teaching in Abu Dhabi. Taking this a step further, the CEPA states that the most prestigious group of engineering institutes in India — The Indian Institute of Technology (IIT) will be set up in the UAE. This will be the first IIT outside of India.
With increasing global attention towards climate change and the COP 28 scheduled to be held in the UAE, the CEPA also focusses on both countries supporting each other’s clean energy missions. It has also been agreed to establish a joint hydrogen task force to help scale up technologies, with a special focus on the production of green hydrogen.
Defence and security
This is another important area of cooperation. Both countries have agreed to continue defence exchanges, sharing of experiences, training and capacity building to maintain peace and stability in the Middle East. With the same objective of maintaining peace and security in the region, it has been agreed to support the reactivation of the Middle East Peace Process in line with the two-state solution based on the relevant United Nations Security Council resolutions and previous agreements between the parties.
CA Dr Harsh Patel, founder and Global CEO, Water and Shark, said: “This deal will strengthen commercial, cultural, and societal ties between both countries. Since the deal focusses on such varied aspects from trade to education to healthcare, it’s not just another business deal but also one that focusses on the human aspect of development.”
Shehbaazali Fazalbhoy, associate-partner, Water and Shark Legal, said: “With this deal, the economic activity between both countries will increase manifold, opening up myriad opportunities for professional, entrepreneurial and overall human development.”
This article is authored by CA Dr Harsh Patel and Adv. Shehbaazali Fazalbhoy. The opinions expressed in this article are those of the authors. They do not purport to reflect the opinions or views of the Water and Shark.