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India-UAE Comprehensive Economic Partnership Agreement


Recently, the India-UAE Comprehensive Economic Partnership Agreement (CEPA) completed one year of implementation.


GS III: Indian Economy

Dimensions of the Article:

  1. Bilateral Relationship between India and the UAE
  2. India UAE Comprehensive Economic Partnership Agreement (CEPA)
  3. About India’s CEPA agreements

Bilateral Relationship between India and the UAE

  • India and the United Arab Emirates established diplomatic relations in 1972. Their bond has grown exponentially since then.
  • In January 2017, India and the United Arab Emirates signed a Comprehensive Strategic Partnership Agreement.
  • The exchange of high-level visits by both sides has given impetus to the strong bilateral relations.
  • In February 2019, the UAE invited India to address the Organization of Islamic Cooperation’s Inaugural Plenary 46th Session as the “Guest of Honour.”
  • In August 2019, Prime Minister Modi paid his third visit to the UAE. He received the UAE’s highest civilian award, the ‘Order of Zayed.’
  • In January 2017, the Crown Prince of the UAE visited India for the second time as the Chief Guest at India’s Republic Day celebrations.
  • In April 2019, the foundation stone for Abu Dhabi’s first traditional Hindu Temple was laid.
  • PM Modi and Crown Prince of Abu Dhabi HH Sheikh Mohammed bin Zayed Al Nahyan held a virtual summit in February 2022.
  • Both leaders issued a Joint Vision Statement titled “Advancing India and the UAE’s Comprehensive Strategic Partnership: New Frontiers, New Milestones.”
Commercial Relationship
  • Until FY20, the UAE was India’s second-largest goods export market, trailing only the US. When the pandemic caused severe trade disruptions in FY21, China pipped it.
  • The UAE is currently India’s third-largest trading partner, with bilateral trade worth $59 billion in FY20.
  • In addition, the UAE is India’s second-largest export destination after the United States (approximately $29 billion in FY20).

India UAE Comprehensive Economic Partnership Agreement (CEPA)

  • Both countries have begun negotiations for a mutually beneficial CEPA in September 2021.
  • The India-UAE CEPA was signed in New Delhi in February 2022 during the India-UAE Virtual Summit.
  • India announced the signing of the CEPA with the UAE in March 2022.
  • It covers almost all of India’s (11,908 tariff lines) and the UAE’s tariff lines (7581 tariff lines)
Priority access to goods
  • CEPA establishes an institutional mechanism to encourage and improve bilateral trade.
  • India will benefit from the UAE’s preferential market access on over 97% of its tariff lines, accounting for 99% of Indian exports to the UAE in value terms.
  • India will also grant the UAE preferential access to over 90% of its tariff lines, including those of export interest to the UAE.
Services Trade
  • India has offered the UAE market access in approximately 100 sub-sectors.
  • Indian service providers, on the other hand, will have access to approximately 111 sub-sectors from the 11 broad service sectors.
  • Both parties have also agreed to a separate Pharmaceutical Annex to facilitate access to Indian pharmaceuticals
  • For the first time, a separate section of pharma has been created to facilitate the export of Indian generic medicines.
  • The UAE is India’s eighth-largest investor, with $11 billion invested between April 2000 and March 2021.
  • Indian companies are expected to invest more than $85 billion in the UAE.
Remittances from Non-Resident Indians
  • The annual remittances made by the UAE’s large Indian community (estimated at around 3.3 million) total US$ 17.56 billion in 2018.
Cooperation in Energy
  • In 2017, the Abu Dhabi National Oil Company (ADNOC) and the Indian Strategic Petroleum Reserves Ltd. (ISPRL) signed a Memorandum of Understanding (MOU) to establish a strategic crude oil reserve in Mangalore (Karnataka).
  • In addition, ADNOC is investigating the possibility of storing its crude oil at ISPRL’s underground oil storage facility in Padur, Karnataka.
  • The Lower Zakum Concession has been awarded to a consortium led by ONGC, which includes Indian Oil and Bharat Petro Resources.

About India’s CEPA agreements

  • India has signed CEPAs with South Korea and Japan and the one with UAE  is expected to increase bilateral trade in goods to USD 100 billion within five years of the signed agreement and increase trade in services to USD 15 billion, leading to wider social and economic opportunities in both nations.
  • CEPAs are a kind of free trade pacts but these agreements or cooperation agreements are more comprehensive than Free Trade Agreements.
  • CEPA usually covers negotiation on the trade in services and investment, and other areas of economic partnership. It may even consider negotiation on areas such as trade facilitation and customs cooperation, competition, and Intellectual Property Rights. It also looks into the regulatory aspect of trade and encompasses an agreement covering the regulatory issues.

Difference between CECA and CEPA

  • CECA – Comprehensive Economic Cooperation Agreement
  • CEPA – Comprehensive Economic Partnership Agreement
  • The major “technical” difference between a CECA and CEPA is that CECA involve only “tariff reduction/elimination in a phased manner on listed/all items except the negative list and tariff rate quota (TRQ) items. CEPA also covers the trade in services and investment and other areas of economic partnership”.
  • Comprehensive Economic Cooperation Agreement is a wider term than Comprehensive Economic Partnership Agreement and has the widest coverage.

-Source: The Hindu

December 2023