Indian industrialists hope for ‘free flow’ of trade after landmark deal with UAE
NEW DELHI: Indian industrialists said this week they hoped for a ‘free flow’ of trade between India and the United Arab Emirates, after the two countries signed a landmark deal that will take annual bilateral trade volume to $100 billion over the next five years.
The Comprehensive Economic Partnership Agreement was signed in New Delhi on Friday by Indian Commerce Minister Piyush Goyal and UAE Economy Minister Abdulla bin Touq Al-Marri. The deal, which would cut tariffs on almost 80% of all goods and provide zero-duty access to 90% of Indian exports, will come into force within the next 60 days.
The UAE is India’s third-largest trading partner after the United States and China, with a two-way trade volume of $43.3 billion in 2020-21. It is also home to over 3 million Indian expatriates, who send billions of dollars in remittances every year.
The new deal is expected to benefit Indian exports in several sectors, including gemstones and jewellery, textiles, leather, footwear, sporting and engineering goods, and pharmaceuticals.
“This is the first free trade agreement India has signed with a foreign country in a long time and it will pave the way for free flow of trade and investment,” the Federation of Chambers of Commerce and Industry said. Indian industry in a press release.
“With the removal of tariffs and the relaxation of investments, this means that a good amount of money is entering the Indian system. In addition, Indian companies will invest in the United Arab Emirates to use it as a base for the [Gulf Cooperation Council] and access to Africa, where it is otherwise difficult for Indians to do business due to financial problems and banking constraints.
FICCI believes the deal will boost the non-oil trade and service sectors.
“A lot of non-oil trade occurs in manufactured items – textiles, clothing, food processing, renewable energy, defense and space transactions – and there is a whole range of engineering products, which would increase trade in these areas” , FICCI said, adding it would increase Emirati investment in India.
Currently, there is a 5% import duty on Indian products exported to the UAE, which will be relaxed after the entry into force of CEPA.
A sector that will particularly benefit from the agreement is that of precious stones and jewellery.
“This is a great initiative that will help major exporters and inspire other domestic players to export their products,” Ashish Pethe, chairman of the All India Gem and Jewelery Domestic Council, told Arab News.
“The UAE is already a major trading partner of India and there is a strong bond between the two nations. The free trade agreement will significantly help bullion dealers exporting from the UAE to India as well as Indian exporters selling products to the Middle East.
Indian foreign policy experts believe that the free trade agreement will give a new direction to the existing economic ties between the two nations.
“This is one of the most significant external partnership agreements between India and a Middle Eastern country and underscores the growing importance of India and the UAE to each other. “said Muddassir Quamar, an analyst at the New Delhi-based Institute for Defense Studies and Analysis. , said Arab News.
“The document provides a roadmap for strengthening ties in new and emerging areas, including cultural cooperation, energy partnership, climate action and renewable energy, emerging technologies, education and skills development, health and food safety, regional cooperation and defense and security. It also expands the existing global strategic partnership.
He said the agreement also underscores India’s growing engagement with Gulf countries and its expanded status as a major regional player.
Professor Zikrur Rahman, founding director of the Indo-Arab Cultural Center and former ambassador to Palestine, called the agreement “deepening and consolidating the strategic partnership between the two countries”.
“It clearly signifies that India is serious in its interactions with the UAE,” he said, “and is following a proactive relationship with GCC countries.”