Celebrating a year of India-UAE CEPA: Impacts and Opportunities
The celebration of one year since the signing of the India-UAE Comprehensive Economic Partnership Agreement (CEPA) has begun, marked by the establishment of the UAE Chapter of the India Business Council (UIBC-UC), which corresponds to the existing UIBC-India Chapter. The purpose of this initiative is to strengthen trade and investment between India and the UAE, promoting economic ties and fostering prosperity. Now, it is essential to examine the significance of the India-UAE economic partnership and the advantages of the CEPA agreement that have been realized thus far, as we reflect on the past year.
Agreement – India-UAE Economic Partnership
The landmark CEPA agreement—the first-ever bilateral trade deal for the UAE and India’s first FTA foray in the MENA region—was signed on February 18, 2022, to propel economic progress, market openness, regional integration, and strategic cooperation. It aimed to transform India-UAE trade relations by reducing and removing tariffs on over 80% of the product lines (90% in value terms) and augmenting services trade to $15 billion by enhancing market access. The CEPA pact also targeted investment facilitation, targeting $75 billion worth of investments from the UAE, by directing funds to India’s priority sectors and enabling collaboration with SMEs.
However, the biggest CEPA agreement’s opportunity lies in its ability to secure supply chains, thus putting this relationship on track to achieving $100 billion in non-oil annual trade by 2027.
Impact – CEPA
In the eight months since the agreement came into effect on May 1st, 2022, the India-UAE economic partnership has undergone a colossal transformation. Some of the major CEPA agreement benefits are:
- The bilateral trade value rose 27.5% YOY to reach $57.8 billion in the first eight months of operation in 2022, growing $12.5 billion from last year .
- In less than a year, non-oil trade between the UAE and India has grown 10 per cent – a surge of $50 billion.
- Sectors like agriculture, automobiles, electrical machinery, and gems and jewelry reported 39%, 35%, 28%, and 18% value-based export growth, respectively.
Opportunities – India UAE Investment
- Over 11,000 Indian companies got themselves registered in Dubai in the past year alone, and now their total is in excess of 83,000, signaling a strengthening of bilateral economic linkages.
- A Dubai Incubation Center for encouraging innovation in logistics was set up by DP World in collaboration with Invest India under the ambit of the CEPA agreement.
- The Ducab Group launched a Bengaluru-based regional office to provide its metal and cable products to the Indian construction and energy sectors.
- The CEPA agreement’s impact can also be seen in the sustainability space, with the setting up of a 300 MW renewable energy project in Gujarat and ecological food parks across India.
Prospects – India UAE FTA
That’s not all. With initiatives like virtual trade corridors and the establishment of the Abu Dhabi Investment Authority’s offices in GIFT City on the anvil, the India-UAE collaboration is expected to scale higher. UAE’s private sector also plans to invest $2.5 billion in logistics, renewable energy, food processing, and retail projects in Uttar Pradesh.
Last year has been phenomenal, the CEPA agreement has resulted in a fusion of the financial, technological, and human capital of both nations, thereby serving as a fertile ground for economic prosperity and innovative cross-border collaboration. India-UAE CEPA has the potential to become a model for other countries seeking to strengthen economic ties with the UAE. The CEPA agreement has already demonstrated its success in boosting trade and investments between India and the UAE. It has provided a framework for enhanced economic cooperation, including in sectors such as services, investment, and intellectual property. Moreover, the establishment of the India Business Council-UAE Chapter has facilitated further collaboration and networking between the two countries. These developments signify the effectiveness of the India-UAE CEPA as a potential model for other countries looking to deepen economic ties with the UAE.