India-UAE CEPA completes one year

In Context

• The historic India-UAE Comprehensive Economic Partnership Agreement (CEPA) which came into force on May 1st, 2022, has recently completed one successful year.

What is the India-UAE Comprehensive Economic Partnership Agreement (CEPA)?

• About:
  • A Comprehensive Economic Partnership Agreement (CEPA) was signed between India and UAE a year ago to strengthen the trade ties between the two nations. 
• Aim:
  • The agreement aimed to increase the total value of bilateral trade in goods to over US$100 billion and trade in services to over US$ 15 billion within five years.
• Significance:
  • Keeping in mind that the gems and jewellery sector contributes a substantial portion of India’s exports to the UAE the agreement is expected to significantly benefit this sector by providing tariff concessions. 
  • Overall, India is expected to benefit from preferential market access provided by the UAE on over 97 percent of its tariff lines which account for 99 percent of Indian exports to the UAE in value terms, particularly from labor-intensive sectors such as: 
    • Gems and jewelry, textiles, leather, footwear, sports goods, plastics, furniture, agricultural and wood products, engineering products, pharmaceuticals, medical devices, and automobiles. 
  • With regards to trade in services, Indian service providers have enhanced access to around 111 sub-sectors from the 11 broad service sectors.

Review of the 1st year of India-UAE CEPA

• Trade success:
  • According to the reports, this was the Fastest Executed Bilateral Agreement where imports and exports increased between India and United Arab Emirates (UAE). 
  • The agreement also boosted trade which benefited the domestic market. Labour-intensive sectors also boomed as a result of this tie-up.
• Increase in India’s exports:
  • India’s global export rose by 5.3 percent and exports to UAE increased by 11.8 percent. 
  • While the export of commodities like jewelry, car, and beauty products rose, in particular – aircrafts, spacecrafts and exports of parts increased as UAE is a transit hub between Asia and Europe and Americas.
• Increase in UAE’s exports:
  • Similarly, imports also increased from the UAE by 18.8 percent. 
  • The nation’s non-oil imports from UAE increased by 4.1 percent and global imports increased by 7.8 percent.
• Certificate of Origin:
  • The report further stated that CEPA ranked second in issuing Certificate of Origin– a document that confirms the ‘nationality’ of a product and serves as a declaration to satisfy customs or trade requirements– in the last 11 months. 
• Below expectation export commodities:
  • On the other hand, the export of commodities such as iron, steel, and apparel did not grow as expected.

India-UAE Relations

• Evolution of relations:
  • Beginning of diplomatic relations:
    • India and the United Arab Emirates (UAE) established diplomatic relations in 1972. 
    • UAE opened its Embassy in Delhi in 1972 & India opened its Embassy in Abu Dhabi in 1973.
  • 2015:
    • The traditionally strong bilateral relations enjoyed by India & UAE received an impetus with the visit of PM Modi to UAE on 16-17 August 2015 which marked the beginning of a new strategic partnership between the two countries.
  • The ‘Order of Zayed’:
    • Modi’s last visit to the UAE was in August 2019, when he received the UAE’s highest award, ‘Order of Zayed’.
  • 2022:
    • In February 2022 both sides signed a Comprehensive Economic Partnership Agreement (CEPA). 
    • The Dubai-based DP World and India’s National Skills Development Council signed an agreement to set up a Skill India Centre in Varanasi to train local youth in logistics, port operations and allied areas so that they can pursue overseas employment.
• Trade:
  • Bilateral trade in FY 2021-22 was about US$ 72 billion. 
  • UAE is India’s third largest trade partner and second largest export destination.
  • UAE’s FDI in India has increased over the past few years and currently stands at over $12 billion.
• Defence and Security Cooperation:
  • Bilateral Defence Interaction between India and UAE has been steadily growing in accordance with other aspects of the bilateral relationship. 
    • The ships of the Navies of both countries have regularly made port calls enhancing bilateral defence co-operation. 
    • India and UAE signed a comprehensive strategic partnership in 2017, and hold annual defence dialogues. 
    • More recently, UAE is a key part of the Indian Ocean Region dialogue.
    • Both sides take part in military exercises with each other and there have been several Military chiefs visits.
• Technology partnerships:
  • India and the UAE have signed a number of digital innovation, technology partnerships, and also plans for ISRO and UAESA to cooperate on missions like the Red Moon mission. 
  • The Emirates has offered “golden visa” residency permits for doctors, engineers, PhD scholars and specialists in high-end technology fields such as artificial intelligence (AI), Big Data, virology and epidemiology, and brought over the former ISRO chief K. Radhakrishnan to their space agency.
• Cultural Relations:
  • The importance given to Indian culture by the UAE was further highlighted in April, 2019 when India participated as the Guest of Honour Country in Abu Dhabi International Book Fair 2019. 
  • Indian cinema/ TV / radio channels are easily available and have good viewership; major theatres/cinema halls in the UAE screen commercial Hindi, Malayalam and Tamil films. 
  • The Emirati community also participates in our annual International Day of Yoga events and various schools of yoga & meditation centres are running successfully in the UAE. 

Way ahead

• India and UAE continue to forge closer partnership in these areas, building on their close and friendly relations and historical people-to-people connect. India-UAE has a strong energy partnership which is now acquiring a new focus on renewable energy.
• It will take a sustained public diplomacy effort to further improve the relations.