The future of economic relations between the UAE and India is all set to go beyond easing of trade restrictions and tariff barriers.
The Comprehensive Economic Partnership Agreement (Cepa) between the two countries that went into implementation from the beginning of this month is a step in that direction.
Clearly, trade is an important component of this comprehensive agreement as India is the second-largest trading partner of the UAE in 2021, accounting for 9 per cent of the total volume of the UAE’s trade with the world, and 13 per cent of the UAE’s non-oil exports.
While the non-oil foreign trade between the two countries in 2021 reached Dh165 billion, a growth of 66 per cent compared to 2020, the Cepa aspires to take bilateral trade to over Dh425 billion within next five years.
Enhancing mutual market access
The agreement will clearly enhance mutual market access for both the countries giving bilateral trade and commerce a big boost. While sectors such as gems and jewellery, textiles, leather goods, pharma and software exports have already started reaping the benefits of Cepa, both countries have begun exploring opportunities in priority sectors such as industrial production, civil aviation, financial services, information technology, food security, transport and infrastructure, logistics services, agro-technology, entrepreneurship, and other future economic factors.
While the UAE has emerged as a fast growing start-up hub in the region, the country is also becoming a scale-up destination where a number of India-based start-ups are already scaling up their businesses and branching into overseas markets.
Indian businesses understand very well that the UAE has one of the strongest and most capable logistics and supply chains that can be key enablers for them to do business within and through the UAE.
The 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 road map designed to double the size of the economy.
With India projected to become the world’s third largest economy in early next decade, the agreement comes with a huge opportunity for UAE-based businesses to gain access to a market of 1.3 billion people.
Clearly, the mutual and reciprocal nature of the gains are unequivocal as Cepa is projected to add growth of 1.7 per cent for the UAE in 10 years and 0.7 per cent for India.
