India and the UAE inked the
Comprehensive Economic Partnership Agreement (CEPA) in February 2022 after just
88 days of discussions. This is India's first comprehensive free trade
agreement in the last ten years, which may be a reflection of the significance
of the parties' trade relationship (the UAE will be India's third-largest
trading partner in 2021). Other agreements, notably with the UK, Australia, and
the EU, are on the horizon.
There are several reasons
why the CEPA is important. Within the next five years, it is anticipated to
increase bilateral trade from $60 billion to $100 billion, creating 1 million
new jobs in India. Greater economic ties with the UAE could pave the way for
stronger ties between India and other Gulf nations, with whom India has
recently seen its bilateral commerce grow at an exponential rate. A trade
agreement will enhance investment and trade between the two regions.
The agreement addresses a
broad range of issues of shared interest, including free trade and the digital
economy. It comes with certain safeguards to protect domestic manufacturers as
well as rules of origin restrictions.
In accordance with the
CEPA, the UAE is expected to reduce taxes on 97% of the tariff lines that
account for 99% of India's exports to the UAE in terms of value, including the
immediate elimination of tariffs on 81% of lines.
The CEPA guarantees 11
industries, including telecommunications, tourism, banking, and construction,
open and non-discriminatory access to trade in services. Increased access will
help UAE service sector businesses aiming to grow to India and sell services
abroad, in addition to improving access for Indians to 111 sub sectors of
business and professional services.
India and the UAE want to
improve their partnership in digital trade, including paperless transactions,
electronic payments, online consumer protection, and the protection of personal
data, through the CEPA. Both nations will make an effort to enact or uphold a
legislative framework for the protection of users' personal data in digital
trade.
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