Free Trade Agreement Signed Between India-UAE: What Are The Benefits?


UAE is India’s third-largest trade partner globally, after the United States and China.

India and the United Arab Emirates (UAE) have signed a trade pact in order to reduce import duties on the majority of Indian exports to the country.

UAE’s Significance To India

UAE is India’s third-largest trade partner globally, after the United States and China.

It is also the ninth biggest source of FDI in India- investing around $17 billion out of which $11.67 billion is in the form of FDI.

The UAE is also home to 35 lakh Indian-origin persons.

Indian Exports Get A Boost

The trade deal called Comprehensive Economic Partnership Agreement (CEPA) is the first major such deal signed by the Modi government since coming to power in 2014.

It was signed in New Delhi by Commerce and Industry Minister Piyush Goyal and UAE’s Minister of Economy Abdulla bin Touq Al Marri.

Aside from cutting import duties on products, it is expected to boost the export of gems, jewellery and apparel to the UAE in particular.

Indian Exports Face Zero Duty

Nearly 80% of India’s exports to the UAE will be duty-free. 

The sectors that would benefit include gems and jewellery, pharmaceuticals and medical devices, education, technology start-ups, infrastructure development, financial markets and services, oil and gas, renewables, advanced technology, aviation, defence, and food production.

Annual exports worth about $26 billion from India that currently attract a 5% import duty in the UAE are set to benefit.

5 Year Plan To Grow Trade To $100 Bn

CEPA will also help raise total trade up to $100 billion from the current $60 billion in the next 5-years.

Trade between the two countries was estimated at $59 billion in 2019-20 before the pandemic.

During the pandemic both sides worked together in critical areas of healthcare and food security.

They are also strengthening their cooperation in new areas of renewable energy, start-ups, and fintech. 

Negotiations Completed In Record Time

CEPA is expected to come into effect by the first week of May since the process will take about 60-days, Goyal said.

Negotiations on the deal have been completed in a record time of just 88 days since its official launch in September 2021.

Modi will likely inaugurate the pact during his visit to the UAE and Kuwait.

The 880-page document covers topics such as free trade, digital economy, government procurement, and strategic areas.

Job Creation

Most of the sectors covered in the pact are labour oriented and the pact will open up at least 10 lakh jobs for youth as the bilateral trade grows to $100 billion.

While the UAE is discussing trade deals with as many as 8 nations, the deal with India has economic and strategic importance.

The UAE has also agreed to facilitate market access and regulatory approval within 90 days for Indian pharmaceutical products and medical products.

This applies to Indian drugs which have been approved in developed countries such as the US, the UK, the EU, Canada and Australia.

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