|Introduction: Give overview of India-UAE CEPA.|
Body: Write significance of the trade deal in detail.
Conclusion: Give a way forward.
India and the United Arab Emirates (UAE) have signed early harvest Comprehensive Economic Partnership Agreement (CEPA), which is the biggest trade pact of the last seven years. The CEPA is set to reduce tariffs for 80 per cent of goods and give zero duty access to 90 per cent of India’s exports to the UAE.
Significance of India-UAE CEPA
- Deepening India-UAE ties: The two countries signed a strategic partnership agreement in 2017. The UAE is India’s third-largest trading partner and second-largest export destination. The CEPA may serve to deepen the partnership.
- Better access to West Asia: The UAE has emerged as an important economic hub within West Asia. The pact would increase the market access of Indian goods and services in the region.
- Improve relation with GCC countries: The pact with the UAE can improve the relations with and revive a long-stalled FTA with the Gulf Co-operation Council
- Access to African markets: The pact can pave the way to markets in Africa. As Under the Greater Arab Free Trade Area (GAFTA) Agreement, the UAE has free trade access to Gulf and North African countries.
- Boost to bilateral trade: The agreement, is expected to boost annual bilateral trade to $100 billion within 5 years of its adoption, up from about $60 billion currently.
- Boost to exports: Zero duty access to India’s exports would stimulate export-oriented industries in India, especially in the MSME sector. As India is witnessing a big turnaround in manufacturing, the UAE would be an attractive export market for Indian electronics, automobiles, and other engineering products.
- Increased remittance flow: Indian investments in the UAE, encouraged by the FTA, will see more remittances flowing into the country.
- Investments from UAE: The UAE, through its ‘Vision 2021’, has sought to diversify its economy and reduce its dependency on oil. The pact will allow India to attract investments from UAE.
- Multilateral economic partnership: India and UAE are part of an economic relations focussed “Middle East Quad”, along with the United States and Israel. This agreement will boost the cooperation among the members.
- Signal to the world : With the CEPA India signaled to the world that while it walked out of the Regional Comprehensive Economic Partnership (RCEP), it is not protectionist, or averse to free trade agreements.
While the early harvest CEPA with UAE is a good step, it represents only a step forward towards a full-fledged trade agreement. India should go for a higher level of ambition to ensure that early harvest agreements with UAE and prospective trading partners like Australia and UK graduate into full-fledged FTAs.