The economic relations between the UAE and India have been on upswing with the political leadership of both countries showing keenness in leveraging the competitive advantages of both the countries to the benefit of their respective economies.
The Comprehensive Economic Partnership Agreement (CEPA) signed between the two countries will undoubtedly be a monumental milestone in the consolidation of strategic and economic partnership. The UAE is India’s third largest trading partner, and second largest export destination.
In the last financial year, the UAE was India’s third biggest export and import market with $60 billion in trade, behind the US ($67.4 billion) and China ($65.1 billion). The India-UAE CEPA aspires to take bilateral trade to over $115 billion within five years.
For India, the CEPA agreement is expected to give market access to the entire West-Asia and Africa regions in sectors such as gems and jewellery, textiles, leather goods and software exports through UAE. In addition, the UAE’s advance multimodal transport and logistics infrastructure can benefit Indian industry to use these as hubs for trade with Africa and Europe.
The agreement would clearly entail the UAE with enhanced market access to India for its key exports such as petrochemicals, metals and dates. With India projected to become the world’s third largest economy in the early part of next decade, opportunities for UAE companies both in oil and non-oil business in the country are expected to grow exponentially over the next decade.
Recent years have also witnessed several major foreign direct investment partnerships between India and the UAE. In June 2020, for example, Mubadala invested $1.2 billion in India’s telecommunications provider Jio Platforms. While in 2019, UAE entities committed $7 billion to create a food corridor between the UAE and India.
Meanwhile, India’s Reliance and Abu Dhabi’s Abu Dhabi Chemicals Derivatives Company (Ta’ziz) recently announced the launch of $2 billion chemical production partnership in Ruwais. CEPA underpins the UAE’s bold economic path for the next five decades and falls under the umbrella of the country’s Projects of the 50 agenda — a comprehensive roadmap designed to double the economy.
At a broader regional context, the CEPA could eventually become a template for the ongoing India-GCC free-trade agreement (FTA) negotiations.