Enabling Enhanced Trade Opportunity

Piyush Goyal, India Union Commerce and Industry Minister, with Abdulla bin Touq Al Marri, UAE's Minister of Economy, after the signing of CEPA
Piyush Goyal, India Union Commerce and Industry Minister, with Abdulla bin Touq Al Marri, UAE's Minister of Economy, after the signing of CEPA

By Muhammad Ali Bandial

Published: Tue 28 Jun 2022, 10:52 AM

The UAE-India Comprehensive Economic Partnership Agreement (CEPA), which was signed on February 18 and officially came into force May 1, promises to be a gamechanger for both countries. The agreement specifically targets certain products that will stand benefit immediately. These include the oil and gas sector, petrochemicals, minerals, textiles, agriculture, jewellery and gems, metals and more.

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The CEPA agreement will make the products more attractive by eliminating tariffs to more than 10,000 tariff lines within a period of 10 years. This will make the products from both countries cheaper to import and thus, have a major impact on trading between India, the UAE and the wider Gulf Cooperation Council (GCC) region.

The origin of CEPA lies in the India-GCC Framework Agreement on Economic Cooperation signed in 2004. However, in its final form, the agreement has taken the shape of a bilateral free trade agreement (FTA) between the UAE and India. This means that the CEPA agreement is only between the UAE and India.

Under the ambit of CEPA, commitments in multiple areas have been made. These include trade in goods, rules of origin, trade in services, customs procedures and trade facilitation, trade remedies, digital trade, economic cooperation, government procurement, intellectual property rights (IPR), investment and trade.

One of the main advantages of CEPA will be the lower tariffs for trade in goods. This means that both countries can now avail greater market access due to the reduction or elimination of customs duties on originating goods. As per the agreement, originating goods will be subject to zero per cent custom duties. While for some products, the tariff lines will be eliminated immediately upon entry into force, others will be eliminated over a period of up to five, seven or 10 years, and the rest will be reduced, as compared to the existing customs duty rates. Therefore, for those goods that are shipped from the UAE to India, they will be placed in one of the three statuses, which are: Tariff Elimination Immediate (TEI), Tariff Reduction (TR), or a Tariff Elimination Phased (TEP).

Another advantage of CEPA is that in accordance with the World Trade Organisation (WTO) Agreement on Trade Facilitation (TFA), the CEPA introduces measures to facilitate cross-border trade of goods. This ensures an efficient customs clearance, including issuing customs rulings prior to import, facilitating cross-border clearance for economic operators, reducing unnecessary regulatory or administrative customs procedures and adopting international best practices of customs management techniques. All these improve the prospects of goods from both countries in the other’s markets.

Both the countries have also agreed to grant services provided by entities in the other party’s territory open and non-discriminatory environment for cross-border trade. In this area, there has been progress made in agreeing to work towards mutual recognition of some professional license or certifications, such as architecture, engineering, accounting, medical and nursing. Furthermore, both the UAE and India have opened up their domestic markets to a broad range of service sectors such as business services, telecommunication services, construction and related services and educational services.

Make it in the Emirates

Dr. Sultan Ahmed Al Jaber, Minister of Industry and Advanced Technology, while speaking about the vision and directives of the President His Highness Sheikh Mohamed bin Zayed Al Nahyan, said the foundation of the national industrial strategy is designed to contribute to a diversified and sustainable economy and leverage on the UAE’s value proposition and competitive advantages to build a strong industrial sector. Furthermore, it is envisioned to enhance self-sufficiency and localise supply chains.

“One of the most important lessons we learned is that regardless of global economic conditions, enhancing self-sufficiency and resilience in vital sectors such as, food, healthcare, and the sectors critical to ensuring business continuity and economic growth, is critical,” said Dr. Al Jaber: “Based on the vision of our leadership, we worked on developing and launching a national industrial strategy, in consultation with all relevant parties in the industrial sector, including government and private sector companies, investors, and financial institutions through a transparent dialogue and various workshops, studies, and international and regional benchmarking.

“Our industrial strategy aims to create an attractive business environment for local and international industrial investors, support the growth of national industries, enhance their competitiveness and empower innovation and the adoption of advanced technologies. It also aims to strengthen the UAE’s position as a global destination for industries of the future and the Ministry encourages financial institutions to offer competitive financing and administrative services based on quality, efficiency and transparency as well as contribute to support the development of laws and legislations that help support and protect our national products,” he added.

He further said that the objective is to safeguard the UAE’s national progress, leverage the legislative system, attract investments to our industrial sector, support local manufacturing and create growth opportunities, with an ultimate goal of empowering our national economy and increasing the industrial sector’s contribution to our GDP to more than Dh300 billion by 2031.

He went on to say that a key enabler of the work has been to research and identify priority sectors to achieve our goal, which include: food and agriculture, pharmaceuticals, petrochemicals, heavy industries such as aluminium and iron, defense, electrical equipment and appliances, in addition to future industries like space and clean energy such as hydrogen.

In this regard,the Ministry increased its efforts to develop an industrial ecosystem and support the growth of the national industrial sector. The Ministry also introduced important programmes and initiatives to standardise procedures, reduce duplication, reduce fees in the sector, provide a platform for innovative entrepreneurs and start-ups, and open new markets in cooperation with its colleagues at the Ministry of Economy and the national departments of economic development.

Most importantly, the partnerships are projected to provide new export opportunities for manufacturers and focuses on five promising industrial sectors, including food and agriculture, fertilisers, pharmaceuticals, textiles, minerals, and petrochemicals.

One such example is the ‘Make it in the Emirates’, which is a campaign that is projected to benefit from CEPA. Abdullah Al Saleh, Under-Secretary of the Ministry of Economy, while talking about the campaign said: “Promoting national products in foreign markets happens through participating in international exhibitions and conferences in countries that signed relevant agreements with the UAE.”

He said that one of the main foundations of industrial prosperity and attracting local and foreign investment in the industrial sector can be attributed to the presence of a large and thriving consumer market, which leads to opening new markets in the country and being given preferential advantages in foreign markets. This, he added was one of the main areas that has been made prominent as an outcome of CEPA. He said that the UAE has successfully opened up new major markets, which will support Emirati products and overcome customs and non-customs obstacles.


Another area that will stand to gain from the Comprehensive Economic Partnership Agreement between India and the UAE will be the remittance corridor between the two countries, which will receive a boost. It will also create a supportive environment to build interoperable digital solutions, according to leading financial services company LuLu Financial Holdings. Speaking about the projected benefit of the agreement, Adeeb Ahamed, Managing Director, LuLu Financial Holdings, said: “The relationship between the UAE and India is at the highest peak at this time. There is a lot of interest by the UAE companies to invest in India. CEPA is going to be the foundation on which things are going to be built.”

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