India and the United Arab Emirates (UAE) celebrated the second anniversary of their Comprehensive Economic Partnership Agreement (CEPA) on 1 May 2024 in Mumbai, India. The UAE Ambassador to India, Dr. Abdulnasser Alshaali, attended the celebration and gave a comprehensive overview of how the bilateral relationship between countries improved considerably after the CEPA.
Bilateral Trade
After signing the CEPA, bilateral trade between the UAE and India has significantly improved. Referring to the CEPA as a “resounding success story,” Ambassador Alshaali pointed out that the agreement was an indicator of the collaborative strength of both countries. According to him, the deal has enabled businesses to profit from the bilateral partnership. Furthermore, it has fostered a deep integration of the respective economies and opened up new opportunities for increased investment flows and collaboration across multiple sectors. Apart from that, the CEPA provides several benefits to both countries. It has eliminated or reduced tariffs, facilitated an environment for open trade, and enhanced service providers’ access to markets across diverse sectors. It also removes several technical barriers and enables access to government procurement opportunities. The agreement has also significantly increased bilateral non-oil trade by 19% between 2021-23.
Indian Export Sector
Since the implementation of the CEPA, the export of Indian gems and jewellery has increased by 64% in the last two years. Other sectors of Indian exports, like fruit and vegetable products, drugs and pharmaceuticals, have witnessed considerable growth (35% and 39%, respectively).
Investments
According to the UAE embassy, the CEPA has been central in developing multiple economically transformative projects like the Bharat Mart in Dubai. The economic pact has also facilitated investments by significant UAE entities in the Indian economy. Some of the noteworthy investments include the Abu Dhabi Investment Fund’s commitment to establish a USD 5 billion fund together with Gujarat’s GIFT City, the robust expansion plans of the Lulu Group in India’s retail market, and Mubadala’s purchase of an 8% stake in Manipal Health.
Future Prospects
According to the UAE Embassy, the CEPA has the potential to expand bilateral trade between India and the UAE further. It will facilitate partnerships in critical areas such as women entrepreneurs, start-ups, and micro, small and medium-sized enterprises (MSMEs).
With a bilateral trade valuation of USD 85 billion in 2022-23, India and the UAE are among the top trading partners for each other. The Indian community also forms the largest expatriate group in the UAE. Indian Prime Minister Shri Narendra Modi’s 2015 UAE visit elevated bilateral relations between both countries to a Strategic Comprehensive Partnership. Following that, both countries signed the CEPA on May 1, 2022. They also signed a Local Currency System (LCS) in July 2023 that promoted the use of AED (UAE Dirham) and the Indian Rupee for cross-border transactions.
