India-UAE Comprehensive Economic partnership Agreement (CEPA)

Context: India-UAE Comprehensive Economic partnership Agreement (CEPA) completes one year

• The historic India-UAE Comprehensive Economic Partnership Agreement (CEPA) which came into force on May 1st, 2022, has recently completed one successful year.
• 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.
• The historical India-UAE CEPA is the first bilateral trade accord concluded by the UAE and India’s first bilateral trade agreement in the Middle East/North Africa (MENA) region.
• India-UAE CEPA is a wide-ranging agreement, covering all aspects of India’s economic engagement with the UAE. This includes Trade, Investments, Healthcare, Digital Trade Government Procurement, IPR etc.

CEPA’s role as a growth engine for India-UAE bilateral trade

• During the past one year, CEPA has made a significant impact on India’s Bilateral Trade with the UAE and particularly India’s Exports to the UAE (Oil and Non-Oil).
• The Bilateral Trade between India and the UAE has touched historic highs during FY 2022-23. Trade has increased from US$ 72.9 billion (Apr 21-Mar 2022) to US$ 84.5 billion (Apr 22-Mar 2023) registering a year-on-year increase of 16%. 
• During the CEPA Implementation period (from May 22 to Mar 23), bilateral trade increased from US$ 67.5 billion (May 21-Mar 2022) to US$ 76.9 billion (May 22-Mar 2023) – an annual increase of 14%.
• Exports from India to the UAE have also registered a multiyear high. During April-March period, Indian exports to the UAE increased from US$ 28 bn to US$ 31.3 bn. An increase of around US$ 3.3 billion; or 11.8% year-on-year growth in percentage terms.
•  India’s Imports from the UAE have grown to USD 53.2 billion (an annual increase of 18.8%) during Apr 22 to Mar 23. Non-oil imports during the same period grew by 4.1%.
• Some of the key sectors, including labour-intensive sectors, that have witnessed significant export growth on account of the CEPA include: Mineral Fuels; Electrical Machinery (particularly telephone equipment); Gems & Jewellery; Automobiles (Transport vehicles segment); Essential Oils/Perfumes/Cosmetics (Beauty/Skin care products); Other Machinery; Cereals (Rice); Coffee/Tea/Spices; Other Agri Products; and Chemical Products.
• Under the India-UAE CEPA in the Goods Domain, UAE eliminated duties on 97.4% of its tariff lines corresponding to 99% of imports from India. India has obtained immediate duty elimination on over 80% of its tariff lines corresponding to 90% of India’s exports in value terms. Most of these tariff lines correspond to the labour-intensive industries/sectors such as oil seeds & oils, beverages, cotton, fish & fish products, textiles, clothing, gems and jewellery, leather, footwear, pharmaceuticals and many engineering products.
• In the Services Domain, broader and deeper commitments have been taken across all the sectors and modes of supply. Out of the 160 services subsectors, India has offered 100 sub-sectors to the UAE and the UAE has offered 111 sub-sectors to India.
• Given the significant increase in bilateral trade, particularly in exports of Indian goods and services, CEPA would have had a positive impact on other key macroeconomic variables such as GDP and Employment.

Prelims questions for practice

With reference to Comprehensive Economic Partnership Agreement (CEPA), consider the following statements:
1. It is a kind of free trade pact that covers negotiation on the trade in services and investment, and other areas of economic partnership
2. India has allowed 1% duty concession on gold imports from the UAE for up to 200 tonnes of shipments under CEPA.

Which of the statements give above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 and 2

Ans. c)

Mains question

Discuss about India- UAE trade relations. How has CEPA helping strengthen the ties between these two nations?

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