Exports to UAE get boost from FTA

India – UAE six months later Free trade agreement (FTA) came into effect, India’s merchandise exports to the West Asian economies rose 13.5 percent year-on-year, outpacing the 10.3 percent increase in the country’s overall cargo shipments.

According to the latest official data, exports to the UAE reached $15.39 billion in the May-October period of the current fiscal year, compared with $13.56 billion in the same period last year. Meanwhile, imports of goods from the UAE rose by 32.6 percent to $27.44 billion during the same period, while India’s total imports rose by 34.6 percent.

Of course, it is still early days and only in the medium to long term can a full analysis of the gains or losses of FTAs ​​be made. “(Nevertheless), initial signs are encouraging. We have been expecting a positive outcome,” an official source said.

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The outcome of the India-UAE Comprehensive Economic Partnership Agreement (CEPA), which came into force on May 1, is significant because it is New Delhi’s first free trade agreement with any economy in a decade, freeing itself from its stifling barriers to effectiveness. trade deal. According to FusionExcel’s analysis earlier this year, five of India’s six major free-trade agreements in force between 2006 and 2011 had exacerbated New Delhi’s trade balance. Following the deal with the UAE, India finalized an interim trade deal with Australia and is currently negotiating a free trade agreement with the UK, EU, Canada and GCC members.

Petroleum products, gems and jewelry account for nearly half of India’s exports to the UAE, followed by certain capital goods and products such as steel, according to official data.Similarly, oil, gemstones and jewelry are sold in India from United Arab Emirates80% import share.

The gem and jewelry industry has been one of the biggest beneficiaries of the trade agreement. Such exports to the UAE rose by 20.6% in the current financial year, far outpacing the mere 2.6% increase in overall shipments of these products.

Under CEPA, the UAE will allow up to 99% of Indian goods (by value) to be duty-free within five years, up from about 90% in the first year. Similarly, India will now allow duty-free imports of 80% of UAE goods, rising to 90% within 10 years.

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India’s labour-intensive industries such as gems and jewellery, textiles and garments, leather, footwear, sporting goods, plastics, furniture, agricultural products and wood products, and other industries such as engineered products, pharmaceuticals, medical equipment, etc. will benefit from the FTA benefits, and cars.

Indian service providers will also have greater access to some 111 sub-sectors across 11 service categories. Bilateral trade, including goods and services, is targeted to increase from about $60 billion in fiscal 2020 before the pandemic to $115 billion over five years.