10 March 2022, NIICE Commentary 7688
Aakriti Verma & Akhilesh Dwivedi
On 18 February 2022, India flag shipped yet another game-changing deal in history by signing the Comprehensive Economic Partnership Agreement (CEPA) with the United Arab Emirates (UAE). The agreement allows collaboration among the countries in diverse sectors. The negotiations for the agreement commenced in September 2021 with the expectations that once articulated and signed will set a benchmark in the history of bilateral relations. Not even from India’s perspective but while looking from the gulf perspective, This is the very first agreement that will be focusing on multiple areas of origin, goods, services, and government investments. The trade sector will also experience a significant boost and more investments will be brought into the country. An extremely interesting fact about the deal is that it was finalised in less than a year while formulating a document takes several years.
As per the Ministry of External Affairs, UAE is India’s third-largest trade partner. Moreover, the country also lifted the ban on imports of eggs and poultry products from India in December 2021 after several rounds of negotiations. The main agenda of the virtual summit held between India and UAE was to improvise the relations between the two. The countries are keenly working towards strengthening the cooperation in startups and renewable energy. The Gulf country has also demonstrated its interest in importing defence equipment from India. A virtual summit was being held with India’s Prime Minister Narendra Modi and his counterpart Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Dubai and the comprehensive agreement was signed by Piyush Goyal, Commerce Minister, India, and his counterpart, Abdulla bin Touq Al Marri, Economy Minister, UAE in New Delhi on 18 February 2022.
Comprehensive Gains from the Accord
The CEPA provides all-weather protection against the unwanted surge of product, commerce, and industry from both countries that will benefit all exporters. The Indian government has provided concessions on gold exports from the UAE, while Indian exporters will get Zero percent duty on jewellery. Multiple sectors like agricultural products, pharmaceuticals, jewellery, plastic and leather products, and medical instruments will benefit from the agreement. But few products have been excluded from the list and in some cases, duty on those products will be reduced as per the need of time. The agreement will help both the countries to get significant benefits and this will increase the trade from USD 60 billion to USD 100 billion in five years. One of the major benefits of the deal is that it will provide over a million jobs to Indian youngsters and will further help in India’s labour-intensive sectors.
UAE Economy Minister, Al Marri stated that the “comprehensive agreement is considered to be a milestone in the India-UAE relations and has been built on decades of enterprise and aspire to establish a new era of progress and prosperity for the people of both nations.” This agreement is drafted in such a way that it will be proven as a new era in the aspect of Global Trade and will be regarded as a triumph. Al Marri further added. In the deal, the petrochemical imports will cost-effectively benefit India’s plastic industry. The medical sector will get a boost as UAE has generously accepted the request of marketing medical products or medicines in the region in a time-bound manner once the developed countries approve it.
In terms of post-pandemic recovery, the UAE expects to add USD 8.9 billion to the country’s Gross Domestic Product (GDP) by 2030. It was also mentioned that the Free Trade Agreement (FTA) is an essential part of the UAE’s plan to bounce back from the pandemic. The country eagerly aims to enhance its position as a promoter of global trade and foster investments and joint venture opportunities as well. Additionally, the agreement will encourage two-way investments in industries including hotels, healthcare, logistics, construction, and professional services. Indian-made jewellery can be imported into the UAE at competitive prices. The UAE charges an import duty of 5 percent as of now. India’s exports to the UAE include petroleum products, metals, and stones. In terms of market access, the agreement will offer India access to entire West Asia and African region. Furthermore, the Indian industry could benefit immensely from the UAE’s advanced logistics and multi-modal infrastructure. The infrastructure could be used as a hub for trade with Africa and Europe as well. When it comes to the UAE, the country will experience huge growth as India is expected to become the third-largest economy in the world in near future. Therefore, the UAE companies, whether associated with the oil or non-oil business are expected to experience a significant boost in India.
A Win-Win Cooperation
To promote cultural cooperation, the leaders decided to establish an India-UAE cultural council. The initiative will be collectively carried out by both countries. It is a well-established fact that India and UAE were bonded over the energy sector and today India is one of the most important energy trading partners of UAE. The comprehensive deal will further strengthen the strategic partnership among them. The participation of Indian companies across the UAE’s energy sector.
Another sector which will be looked after is climate security. Both the countries have decided to intensify collaborative strategies accelerating climate change. Thus, the leaders have agreed upon supporting mutual clean energy missions. This roadmap further led to the establishment of a joint hydrogen task force. The main focus will be laid on Green Hydrogen’s production. Along with the above-mentioned areas, the focus will also be directed on establishing world-class educational institution, enhance mutual support in diversified sectors, promote maritime cooperation, defence exchanges, training, and capacity building. ensure the supply and reliability of food chains and promote investments in agriculture and food systems and provide healthcare in underprivileged regions and promote health in society at large.
This includes frameworks for safeguarding intellectual rights, including new sectors such as agricultural and food genetic resources. It also encourages cooperation on intellectual property matters concerning SMEs and science and technology development. Hence, the Comprehensive Agreement is an absolute win-win for both countries as it will provide a balanced and equitable trade. This partnership which covers 11 industries and over 100 sub-sectors will further strengthen the relations between the two in the international realm as well. India-UAE and India-Israel share stable bilateral relations, and Israel, UAE being the members of Abraham Accords, also opens up the opportunity for India-UAE-Israel trilateral partnerships or the possibility of another multilateral cooperation in the global sphere which will further open up new prospects for India.
Aakriti Verma is pursuing Master’s in International Relations and Akhilesh Dwivedi is a PhD student in Defence and Strategic Studies in India.
