The United Arab Emirates and India have consensually signed the Comprehensive Economic Partnership Agreement (CEPA) with a farsighted approach of strengthening the bilateral relations and boosting trade and investment between both countries.
The deal is said to be an important step for trade and business even as the two nations celebrated the Golden Jubilee of diplomatic relations.
The Indian Commerce and Industry Minister Piyush Goyal visited the UAE to participate in the ‘Investopia Summit’ and ‘World Government Summit’, which that was held in Dubai on 28th March 2022 and 29th March 2022 respectively. It was on the sidelines of this event that both the countries signed the CEPA with to strengthen bilateral relations.
The countries believe that this would help in strengthening the relations and thereby boost the investment and employment of the two nations.
Industry advantage
The India-UAE VC Fund worth $150 million launched at India Pavilion aims to source, invest and help in establishing the various ventures. This will help in developing in the growth of India and UAE startups.
Speaking at the event, Goyal said: “The UAE has a huge investment surplus in terms of investments ability, and India has a huge market which makes that an attractive destination, and therefore, we are not in competition with each other; rather, we complement each other. We are natural partners.”
Segments like textiles, leather, footwear, sports goods, engineering products, medical devices, automobiles, and gems and jewellery will be benefitted.
In addition, the annual exports worth approximately $26 billion from India that attract a 5 percent import duty in the UAE are set to benefit from the agreement.
According to a government release, in the area of trade in services, Indian service providers will be given market access to 11 broad service sectors like business, communications, construction and related engineering services, education, finance, and tourism and travel, and many others.
Plus, the UAE has agreed to provide market access for Indian pharma that has already been approved in the developed jurisdictions such as the US and EU within 90 days. This is a welcome move for the industry players.
The agreement also provides a proposition to form a technical council on investment, trade promotion, and facilitation led by both India and UAE.
This will help in monitoring the trade relations and investment flows between the two countries. There will be a considerable scope of opportunities for small and medium enterprises (SMEs) which would ultimately lead to job creation and employment avenues.
Startups and other organisations in both the countries have enough potential and therefore can make optimum utilisation in fields such as sustainability, space technology, connectivity, artificial intelligence, emerging technologies and data analytics.
According to media reports, talking about the benefits for the startup ecosystem, “Today we are the third-largest startup ecosystem, but our aspiration is to be the world’s number one startup destination. The startup bug has caught India’s imagination. The entire innovation ecosystem that the startup industry represents is giving a new direction, new momentum to India,” he said.
He added, “I have seen tremendous response from the Dubai Expo where our startups have got the opportunity to raise finances, sign MoUs (Memorandum of Understandings) and get angel investments.” The minister had also requested the startups to expand their reach to remote regions, villages, smaller towns, and also parts of northeastern India.
To sum up, this pact will indeed open a plethora of opportunities for several companies from different industries.
Opportunities galore
While talking about the pact, Minister of Commerce and Industry, Piyush Goyal, on this pact said: “The pact will not only enhance India’s commercial ties with the Emirati nation but also provide an “entry point” in several parts of Africa and the Middle East.”
At present, the UAE is India’s third-largest trade partner. The CEPA that was signed between the two countries at that time aimed to facilitate the bilateral trade relations between the two nations.
This is expected to amount to $100 billion over 5 years as against $43.3 billion in FY21. It will encompass most of the industries and their respective sectors ranging from goods, services, rules of origin, intellectual property rights, e-commerce, and government procurement.
This agreement will put India in an advantageous situation. There will be better market access provided by the UAE on over 97 percent of the tariff lines which account for 99 percent of Indian exports to the UAE in value terms.
This will provide the UAE preferential access to the UAE on 90 percent of its tariff lines.
According to the report, the primary industries that will have advantages from the CEPA are the ones that have a major involvement of manual labour.
Vikram Gupta, Founder and Managing Partner of IvyCap Ventures.
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