• May 6, 2023

One year of the India-UAE CEPA has passed

GS 2 India & Foreign Relations

In Context

• The historic Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates, which went into effect on May 1, 2022, has finished its first successful year.

What is the India-UAE Comprehensive Economic Partnership Agreement (CEPA)?

About

•  To improve their trade relations, India and the UAE inked a Comprehensive Economic Partnership Agreement (CEPA) a year ago.

Aim

•  Within five years, the pact sought to double the value of bilateral commerce in goods to over $100 billion and in services to over $15 billion.

Significance

• The deal is anticipated to considerably benefit this industry by offering tariff discounts, taking into account that the gems and jewelry sector provides a considerable share of India’s exports to the UAE.
• Overall, India is anticipated to benefit from the UAE’s preferential market access, which covers more than 97 percent of its tariff lines and represents 99 percent of India’s value-added exports to the UAE. This is especially true for labor-intensive industries like gems and jewelry, textiles, leather, footwear, sports goods, plastics, furniture, agricultural and wood products, engineering products, pharmaceuticals, medical devices, and automobiles.
• In terms of trade in services, approximately 111 sub-sectors from the 11 major service sectors are now more accessible to Indian service providers.

Review of the 1st year of India-UAE CEPA:

Trade success

•  This was, per reports, the fastest-executed bilateral agreement between India and the United Arab Emirates (UAE), where imports and exports rose.
•  Additionally, the deal increased commerce, which helped the local market. This partnership led to a surge in labor-intensive industries as well.

Increase in India’s exports

• While the export of goods like jewelry, cars, and beauty products rose, in particular – aircrafts, spacecrafts, and exports of parts increased as UAE is a transit hub between Asia and Europe and the Americas – exports to UAE increased by 11.8 percent.

Increase in UAE’s exports

•  In a similar vein, imports from the UAE rose by 18.8%.
•  Non-oil imports into the country from the UAE climbed by 4.1 percent, while imports worldwide increased by 7.8 percent.

Certificate of Origin

•  According to the research, in the last 11 months, CEPA came in second place for issuing Certificates of Origin, which serve as declarations to satisfy customs or trade regulations and certify the “nationality” of products.

Below expectation export commodities

• On the other hand, exports of goods like iron, steel, and clothing did not increase as much as anticipated.

India-UAE Relations:

Evolution of relations:

Beginning of diplomatic relations

• Diplomatic ties between India and the United Arab Emirates (UAE) were established in 1972.
• In 1972, the UAE opened an embassy in Delhi, and in 1973, India opened an embassy in Abu Dhabi.

2015

•  With the visit of PM Modi to the UAE on August 16–17 2015, which signaled the start of a new strategic relationship between the two nations, the historically strong bilateral relations enjoyed by India and the UAE gained momentum.

The ‘Order of Zayed’

•  In August 2019, during his most recent trip to the UAE, Modi was presented with the country’s highest honor, the Order of Zayed.

2022

• Both parties signed a Comprehensive Economic Partnership Agreement (CEPA) in February 2022.
• The National Skills Development Council of India and Dubai-based DP World have agreed to establish a Skill India Center in Varanasi to teach local students in logistics, port operations, and related fields so they can seek work abroad.

Trade

• UAE is India’s third-largest trading partner and its second-largest export market. Bilateral trade in FY 2021–22 was approximately US$ 72 billion.
• Over the past few years, UAE FDI in India has grown and is now worth over $12 billion.

Defence and Security Cooperation

• Mutual Defense In line with the development of other facets of the bilateral relationship, communication between India and the UAE has been continuously increasing.
• The bilateral defense cooperation has improved as a result of frequent port visits by the ships of the two nations’ navies.
• In addition to yearly defense talks, India and the UAE inked a comprehensive strategic cooperation in 2017.
• UAE has recently played a significant role in the debate around the Indian Ocean Region. Both sides engage in joint military drills, and various military commanders have visited.

Technology partnerships

• India and the UAE have agreed to work together on initiatives like the Red Moon mission through a number of technological and digital innovation agreements.
• For professionals in high-end technical disciplines including artificial intelligence (AI), big data, virology, and epidemiology, the UAE has granted “golden visa” residency permits. They have also hired the former ISRO chairman K. Radhakrishnan to lead their space agency.

Cultural Relations

• India’s participation in the 2019 Abu Dhabi International Book Fair as the Guest of Honor Country in April further demonstrated the UAE’s appreciation of Indian culture.

• The Emirati community also participates in our annual International Day of Yoga events, and various schools of yoga & meditation centers are successfully operating in the UAE.
• Indian cinema, TV, and radio channels are easily accessible and have a good viewership; major theatres/cinema halls in the UAE screen commercial Hindi, Malayalam, and Tamil films.

Way ahead

• Building on their cordial ties and long-standing human connections, India and the UAE are forging a tighter relationship in these sectors. A strong energy connection exists between India and the UAE, which is now placing more of a focus on renewable energy.
• To further enhance the relationships, public diplomacy will be required.