Current Affairs 2022: Importance of Economic Partnership with UAE to India

By Abhishek Desai

The CEPA is meant to augment ties between India & the UAE and increase the non-oil merchandise trade up to USD 100 billion in the next five years. 

The monumental CEPA (Comprehensive Economic Partnership Agreement) which was signed recently, in March 2022, between India and the United Arab Emirates (UAE) has been touted to be a major advancement in strengthening the bilateral ties as well as economic cooperation between the two countries. One of the major goals of the CEPA is to bolster the bilateral non-oil merchandise trade up to USD 100 billion by the year 2027. It will also stimulate bilateral investments with gains in various labour-intensive sectors such as Leather Goods and Footwear, Food Processing, Textiles, Gems and Jewellery, etc. From India’s point of view, this agreement will eventually provide significant benefits which are stated below: - 

Job Creation for the Indian Manpower:

The CEPA is bound to generate not only additional job opportunities but also upgrade the current working conditions for the Indians residing in the UAE. This number of work opportunities could well be up to approximately one million jobs across different labour-intensive occupations. 

Ease of Doing Business:

The CEPA furnishes for marketing authorization and automatic registration of the Indian generic medicines in 90 days upon their compliance in the developed economies. India has already offered duty allowances on the imports of gold from the UAE while the exporters of Indian jewellery will have zero duty access to the UAE market. This is a significant move since their trade comes up to a whopping 16% of the global diamonds, and jewellery trade. 

Boost to Indian Exports:

In the CEPA, about 90% of the exports and 80% of the trade lines from India to the UAE will be levied zero duty. This zero-duty access would mushroom over five to ten years to almost 99% of the Indian exports by value. This will be a watershed moment in the history of India - UAE economic relations since the UAE is India’s third-largest trading partner and the second-largest export destination, whereas India is the second-largest trading partner and largest exporter of the UAE. Another point worth mentioning is that the CEPA will greatly account for almost USD 26 billion worth of Indian products, which are usually subjected to a 5% import duty by the UAE. 

Climate Action:

The CEPA also mentions effective planning and implementation happening on the Paris Agreement, working together on the International Solar Alliance, International Renewable Energy Agency, etc.    

Partnerships in Defense and Security, and Global Affairs:

Both nations have acknowledged to not only assist each other in matters of global affairs but also to maintain peace and stability in the region.    

Access to the MENA region:

The CEPA being India’s first-ever bilateral trade agreement in the Middle East and North Africa (MENA) region, will facilitate similar agreements with the other Gulf Cooperation Countries (GCC) such as Qatar, Saudi Arabia, Oman, etc. This will lead to providing a better entry for India into the markets of the MENA region by using the logistics and transport infrastructure of the UAE.  

Education and Emerging Technologies:

Both nations have mutually decided to set up globally - renowned institutions for guiding technological and innovation progress. The very first Indian Institute of Technology (IIT) is planned to be inaugurated in the UAE. The CEPA will also ensure a mutually beneficial collaboration on some critical technologies and promotions of digital businesses and online payment solutions among others. 

Skill Collaborations between India & the UAE:

Both countries will work together to ensure that the UAE’s labour market skill requirements from India are met with the help of the workforce's access to effective training programs which are in sync with the current and future industrial needs. 

Health Cooperation:

There was a mutual acceptance in partnering on the research and development front, and effective production of definitive supply chains for vaccines as well as enabling UAE – led investments in the ever-evolving Indian health framework. 

Prevention techniques on treaty abuse:

The CEPA has a fixed protective mechanism to implement, in the case of an unforeseen import rush, alongside the firm Country of Origin rules. This shall act as a deterrent in abstaining commodities from other nations to pass through the CEPA route. This is mainly because UAE is a worldwide transshipment hub, and it invites the possibility of treaty abuse.   

Food Security:

Both countries have also admitted to lengthening their cooperation in the form of efficient bilateral food and agricultural trade and robust foreign investments in the agriculture sector.    

Cultural Cooperation:

The CEPA has the potential to act as a platform for the India - UAE Cultural Council, which will help a lot in encouraging the facilitation of various cultural projects, cross-cultural exchanges, etc.       

In conclusion, the CEPA can be attributed to being a mutually-beneficial momentous pact that will greatly benefit India and the UAE in the short as well as the long run. Both nations will now look to focus on its effective implementation so that its inevitable gains and a loner amount of sustainability are maximized as much as possible.  

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