Since 3000 BC, there have been trade ties between India and the Arab world. In the present, the UAE-India trade stood at $43.3 billion during 2020–21, spread across 1,000-plus tradable items.
The Comprehensive Economic Partnership Agreement (CEPA) between the two nations should be seen as a testament to an evolving partnership. The CEPA, which was finalized and signed in a record 88 days, will cover over 90 per cent of India's exports to the UAE, providing them with duty-free access. These products are currently subject to 5 per cent import duty by UAE.
Such a pact is the region's first, with a possible enormous positive outcome for the entire Gulf region. The signing of the trade deal could not have come at a better moment. The UAE recently celebrated the 50th anniversary of its foundation, while India is celebrating its 75th year of Independence.
CEPA will support growth and development of India’s micro- and small-to-medium enterprises by enhancing their ability to participate in - and benefit from - the opportunities created by the agreement. The agreement itself is covered across various chapters with annexures attached to each. The critical ones cover trade in goods, technical barriers to trade, IP rights, and dispute settlement.
All that glitters
Dubai to become the next Zurich for India. Gold bars from UAE and jewellery from India are the two essential items that have caught the most market attention. India imports around 800 tonnes of gold every year. For UAE, India has given a tariff rate quota of 200 tonnes, with tariff in perpetuity 1 per cent less than whatever is charged on gold imports from the rest of the world.
This will, in essence, give UAE a 1 per cent price advantage in gold bars, thereby providing it with an upper hand in gold trade with India.
The significant gains for India are that Indian jewelry gets zero-duty access to the UAE market, as against 5 per cent earlier. As a result, the UAE becomes a huge entry point for India to the rest of the MENA and Central Asia regions. Indian jewellery exports are likely to increase by 200 per cent over the next three years.
Dubai could compete with Zurich, which currently accounts for half of India's gold imports. Gold imports from Switzerland now stand at $16.3 billion, accounting for nearly half of India's bullion imports for 2020–21.
First IIT in the region
The first Indian Institute of Technology (IIT) planned in the UAE will admit Indian expats, Emiratis, and other international students. IITs are India's premier national higher education institutes, and 23 IITs offer a diverse range of degrees, from undergraduate and postgraduate degrees to doctoral programs.
The move is a game-changer as it allows the Gulf region to access the rich academic experience from the Subcontinent.
Recast the economic map
For the UAE alone, the CEPA is expected to add 1.7 per cent to its GDP by 2030 and also increase its bilateral trade with India beyond $100 billion.
The UAE will now have access to one of the fastest-growing economies globally, whereas, for Indians, new gateways will be explored further through business-friendlyplatforms. The liberalized visa regime proposed between the two nations includes a 3-year provision for intra corporate transfers, a 90-day visa for business visitors, and a 90-day extendable visa for contractual service suppliers.
Key mantras of a new era
Both countries have adopted a more practical and collaborative vision that serves them well. The broader stakeholders, including salaried class and business professionals, stand to gain the most. The CEPA showcases the synergy between the two nations as natural partners.