CEPA: The UAE + India = Enhanced Bilateral Trade & Investments
India’s first bilateral trade agreement in the Middle East and North Africa (Mena) region, India-UAE CEPA can be seen as a trendsetter of exponential growth in trade between the two countries a template for future trade agreements that both the nations are planning to sign with other countries. The free trade deal has bolstered their efforts to negotiate and sign foreign trade agreements with several other countries on the lines of this agreement. The future requirements emerging from the shift towards automation and artificial intelligence, digital trade, fintech, edtech, green tech and sustainability have also been taken care of. It’s pretty obvious that the win-win deal has so much in store for multinationals in both nations.

About CEPA

Under the Greater Arab Free Trade Area Agreement (GAFTA), the UAE has free trade access to Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, Jordan, Egypt, Iraq, Lebanon, Morocco, Tunisia, Palestine, Syria, Libya, and Yemen. On 18 February 2022, Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Narendra Modi, India’s Prime Minister ratified an 880-page Comprehensive Economic Partnership Agreement during a virtual summit with an aim to boost economies mutually by sharing best practices and expertise. Strengthening the historic ties between the two nations, the free trade agreement came into force on 1 May 2022. About USD 100 billions of additional trade is expected from this landmark trade agreement in the coming years.

CEPA: Objective

The objective behind the nations signing CEPA is to remove tariffs to 10,000+ tariff lines within a period of 10 years, and it is anticipated to have a huge impact on trading between India, the UAE and the wider Gulf Cooperation Council (GCC) region. The cooperation may be extended to upcoming areas, such as fintech lending and embedded financing. This can be great news for those who are from or planning to enter sectors such as oil & gas, textiles, healthcare, pharma, real estate, construction and gems and jewellery segments. 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 structured to double the economy. Click here to read in detail.

CEPA: Highlights of the Trade Deal

The agreement:

  • Covers 11 service sectors and over 100 sub-sectors including business services (professional services, accounting, real estate, and advertising, among others), telecom, construction services, educational, financial and insurance, social and health services, travel and tourism, entertainment, cultural and sports, and transport
  • Beefs up access to markets and targets new investments in key sectors including energy, environment and digital trade
  • Brings fresh growth opportunities for the petrochemicals sector in the UAE
  • Permits access to government contracts in the government sector purchase markets in both countries
  • Provides frameworks for protecting intellectual property rights, including in new areas like genetic resources for food and agriculture
  • Motivates cooperation in intellectual property matters pertaining to SMEs, sciences, technology, innovation and technologies inventions

With CEPA, both the nations can hope for considerable economic advantages through:

  • education
  • the cancellation of customs tariffs
  • facilitating access to markets
  • and providing opportunities in vital sectors such as aviation, environment, hospitality, logistics, investment, building and construction, financial services and digital trade

Most Exchanged Commodities between the UAE & Dubai

Primary goods exchanged between the two nations include:

  • Precious metals, stones & gems, gold, diamonds, ornaments and jewellery
  • Engineering and machinery products
  • Chemicals
  • Electrical appliances and parts
  • Petroleum oils, plastics and their products
  • Metals including iron, steel and aluminium
  • food items — such as cereals, sugar, fruits and vegetables, tea, meat, and seafood

CEPA: Advantages & Beneficiaries

CEPA amps up commercial flows between the two markets by eliminating tariffs on around 80% of goods, which will upthrust non-oil trade between them from $45 billion in 2021 to $100 billion in five years.

  • The agreement is set to benefit nearly 90% of trade between the two nations
  • The success of the agreement will lead to businesses dealing in gems and jewellery, petroleum products and dates among others jump on the bandwagon. India’s pharma, technology and services sectors will also enjoy a slice of the action
  • India estimates one million job opportunities in the wake of the agreement
  • The fact that the digital economy has received special attention in the CEPA
  • Both the countries are also looking at increased competitiveness of their products, especially India, as the deal provides its businesses the much-needed market access to Africa, Central Asia and other Middle Eastern markets through the UAE
  • Among the major gainers will be the labour-intensive Indian products exported to the UAE such as textiles, gems & jewellery, medicines, agricultural products, footwear, leather, sports goods, engineering goods, auto components and plastics
  • The agreement also seeks to address UAE’s food security and India’s energy security issues
  • CEPA is expected to elevate non-oil trade with India by 120% according to Dr. Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade

CEPA & Business Opportunities in Dubai

Both the CEPA beneficiaries account for over 16% of the global trade in diamonds, gold, and jewellery. Approx. 20% of India’s gold trade is with the UAE and 20% of the UAE’s gold trade is with India. Moreover, 3% of UAE ‘s commodities trade in relation to COVID-19 is with India. Further, India is one of the world’s 15 top food commodity exporters and the UAE is among the top recipients of its exports from this commodity group, as it accounts for over 5% of its total exports to the world, after America and China. India holds second place in terms of the total UAE trade of food products, while India is among the top suppliers of food products in the Emirati market, accounting for 10% of the UAE’s food imports.

News for others, Opportunity for you!

If you’re looking to establish your presence in the emirates by opening an export-import company or starting a business in any of the aforementioned industries to reap the sectoral benefits in the wake of CEPA. there can never be a better time than now.  Get in touch with Adam Global Dubai business setup consultants for a smooth and successful business formation journey in Dubai or any part of the UAE.