There is little question that the UAE-India Comprehensive Economic Partnership Agreement (CEPA) will come to be regarded as a significant milestone in the history of the UAE.
Specifically, it was the nation’s first bilateral deal as part of its new national strategy to reimagine the economy as an open global hub for trade, talent, technology and targeted investment. This week, as we met with our counterparts in India to celebrate the anniversary, we were able to reflect on how it is pointing the way to a new era of global trade.
Signed on February 18, 2022 in the presence of His Highness Sheikh Mohamed bin Zayed Al Nahyan, President of the UAE, and Narendra Modi, Prime Minister of India - and implemented on May 1, 2022 - the UAE-India CEPA was designed to deliver seamless access to the world’s fifth-largest economy – and a market of 1.4 billion people.
By removing or reducing tariffs on 80 per cent of goods, eliminating unnecessary barriers to trade and opening government procurement to each other’s private sector, the UAE-India CEPA carried the potential to more than double the value of bilateral trade to $100 billion by 2030. There are already signals that the numbers will go higher still.
We continue to work in close cooperation with my counterpart Piyush Goyal, the Indian Minister of Commerce and Industry, and his team to ensure both nations are deriving the maximum benefit from the deal. This week, for instance, our team has been back to India to convene the first Joint Committee, which we agreed would meet one year after implementation to review and refine the CEPA’s terms.
It was an opportunity to cement one of the UAE’s most pivotal international alliances and refocus efforts on facilitating capital flows into sectors such as agritech, logistics, advanced technology and renewable energy. We all understand we cannot afford to stand still.
Real impact, surging numbers
When we launched the CEPA, we anticipated that the deal would add 1.7 per cent - or $8.9 billion - to the UAE’s GDP and increase exports by 1.5 per cent. We are on course to surpass those numbers.
Initial figures show that, for the first 12 months of the CEPA, the value of non-oil trade reached $50.5 billion, an increase of 5.8 per cent on the corresponding period a year earlier.
Importantly, that growth was recorded as global trade declined in both Q3- and Q4-2022, which supports the contention that the CEPA helped insulate us from tightening economic conditions.
The picture in Q1-2023, the last quarter for which we have full numbers, is even more encouraging. Total bilateral trade increased 16.3 per cent compared to the previous quarter to reach $13.2 billion, with the UAE’s non-oil exports to India climbing 8 per cent.
This elevated trade activity also reflected in leading logistics providers adding supply-chain capacity between the two nations, for example, SeaLead established a service on the India-Dubai-East-Africa (IDEA) route soon after the CEPA implementation, demonstrating its potential to impact trade flows across the wider region.
New investments, new opportunities
The benefits of greater UAE-India integration have been far broader than just trade. Indian business owners have been spurred to pursue new opportunities in the UAE, with 11,000 new companies registering with the Dubai Chamber of Commerce in 2022, bringing the total to more than 83,000. Malabar Gold & Diamonds, one of the largest jewelry retail chains in the world, decided to consolidate its international operations in a new Dubai headquarters.
In the other direction, UAE cable manufacturer Ducab opened a new office in Bengaluru in January to better serve its growing customer base in the Subcontinent, while DP World opened new technology centers in Hyderabad, Bengaluru and Gurugram. Other strategic investments into India from the UAE include support for a 300MW hybrid renewable energy plant in Gujarat and funding for a series of sustainable food parks.
What’s next?
This is, of course, just the start. The UAE-India CEPA has been designed to create long-term sustainable opportunity – and its inbuilt flexibility, as demonstrated by the work of the Joint Committee, will enable us to deliver it.
The UAE and India are committed to developing this unique framework, which will define bilateral relations for decades to come.
