India and the United Arab Emirates (UAE) signed the first bilateral free trade agreement between the two countries during a virtual summit today.
Once the bilateral free trade agreement enters into force, India is expected to export at least 80% of its products to the UAE duty-free.
The country could export an additional $2 billion in textiles over the next two years and triple its plastics exports to the UAE under the Comprehensive Economic Association Agreement (CEPA), which the two sides will sign on Friday.
The agreement aims to increase bilateral trade from $60 billion to $100 billion over the next five years. According to industry estimates, it will also create more than 500,000 jobs in the Indian gems and jewellery textiles, engineering products, pharmaceuticals, medical devices, automobiles, leather, sporting goods, and furniture industries.
The comprehensive economic partnership agreement (CEPA) with the UAE will include provisions to protect domestic industries while also serving as a gateway to West Asia and Africa.
The industry has asked for the removal of the 5% import duty on gold, silver, and platinum jewellery exports from India to the UAE, as exports of these items fell to $1.18 billion in 2020-21 due to the Covid-19 pandemic. The United Arab Emirates lifted a ban on importing eggs and other poultry products from India in December of last year, satisfying a long-standing demand.
Negotiations for CEPA, India’s first trade agreement of its kind in the Gulf region, began in September 2021. It will almost certainly cover topics such as goods, services, rules of origin, digital trade, government procurement, and investment.
The United Arab Emirates is India’s third-largest trading partner. In the previous fiscal year, it was India’s second-largest export destination after the United States, with exports totalling around $29 billion.