India’s exports to UAE expected to hit $32 billion in 2022-23

According to the Ministry of Commerce, India’s exports to the UAE are expected to rise to $32 billion in 2022-23 (up 14% YoY) due to the entry into force of the CEPA trade agreement on 1 May 2022. There has been a significant increase in the number of Certificates of Origin issued by India to exporters, enabling them to access India-UAE CEPA trade preferences.

According to Ministry of Commerce forecasts, India’s exports to the UAE may reach $32 billion in 2022-23. This would represent a 14 percent increase over India’s $28.04 billion in exports to the GTC in the previous fiscal. Before COVID, India’s exports to the UAE stood at $31.2 billion in 2016-17.

India and the UAE are currently discussing integrating their customs and logistics portals to enable real-time tracking of cargo and ensure priority access to ports. The move would be in line with their CEPA agreement.

Latest India-UAE Trade Data

From June 2022 to February 2023, India’s exports to the UAE increased by 10.4% year-on-year to US$23.03 billion, while India’s total exports to other markets increased by 0.9%.

During the same period, India’s non-oil exports to the UAE amounted to $17.36 billion, up 6.5% year-on-year. In contrast, India’s non-oil exports to the rest of the world fell by 4.2% between June 2022 and February 2023.

India’s imports from the UAE rose by 12.9% to $38.95 billion between June 2022 and February 2023.

India-UAE CEPA a key enabler

Increase in Indian exports to UAE can be seen as expected outcome India-UAE Comprehensive Economic Partnership Agreement (CEPA), effective May 1, 2022.

Exporters have benefited from immediate tariff concessions on most product lines such as gemstones and jewellery, electrical machinery and equipment, machinery and mechanical appliances, coffee, tea, spices, sugar, staple fibers and edible vegetables.

“The use of free trade agreements has been growing steadily,” an official source told the media. [CEPA] This is reflected in the number of preferential certificates of origin (COO) issued each month which has stabilized over the past few months. ”

The COO is mandatory if the exporter wants to apply for tariff concessions under CEPA. They certify that the exported items meet certain standards stipulated in the agreement and originate in India. Indian exporters need to submit COO at the port of landing at the import destination.

Certificates of origin under the India-UAE CEPA are issued by 17 agencies in India, including the Export Inspection Council (EIC) and the Spices, Coir and Tobacco Board. COOs are being issued electronically to speed up processing times and facilitate trade.

As of February this year, India has issued a total of about 6,944 certificates of origin, a significant increase from the 2,316 COOs issued in June last year. In fact, 17,005 COOs worth $3.33 billion were issued to exporters between October and December 2022, while non-oil exports were valued at $5.45 billion during this period.

In December 2022, $1.1 billion worth of COOs were issued, led by textiles – certificates worth $303 million, followed by gems and jewelry at $185 million, edible fruits and nuts at $90.61 million, and live animals in the US at $8809 million US dollars, 38.79 million US dollars for cars, and 36.34 million US dollars for footwear.

India’s exports of gems and jewelry to the UAE rose 16% to $3.8 billion during June 2022-January 2023, while exports of electrical machinery rose 29% to $2.6 billion. During the same period, auto exports rose 38 percent to $475 million.

Moreover, according to media reports in March, Indian exports worth $1.3 billion per month benefitted from the UAE’s zero-duty market access, while outbound shipments totaled $2.72 billion.

Overall, the UAE is India’s third-largest trading partner after the US and China. Two-way trade between India and UAE reached $70.19 billion between April 2022 and January 2023.

Since coming into force, the India-UAE CEPA has removed Indian duties on 90% of the UAE’s exports. The main winners were items in the gems and jewelry, textiles, leather and engineered product categories. Petroleum is not part of the CEPA agreement.

The two countries aim to reach $100 billion in bilateral trade (non-oil items) by 2030.

The UAE is a transshipment hub

According to UAE sources, India’s re-exports to the UAE will grow by 10% in 2022. Furthermore, 11,000 new Indian companies were registered in Dubai, according to the UAE Chamber of Commerce.

Global headwinds slow trade in key sectors

Despite the CEPA incentives, global headwinds have affected the overall export volume of apparel.

Likewise, India’s steel exports to the UAE have also declined despite the government’s easing of restrictions. The Indian government removed export duties on steel and iron ore in November last year after a sharp drop in export volumes in October; the duties had been imposed in May.

Trade in these areas is likely to pick up in the upcoming financial year, but will depend on global inflation trends, among other things.

Other agreements, partnerships and investments

• On January 13, 2023, the Ministry of New and Renewable Energy, Government of India, and the Ministry of Energy and Infrastructure, Government of the United Arab Emirates signed a Memorandum of Understanding (MoU) to encourage investment in the development and green hydrogen in India and UAE.
• UAE interested in investing in India’s integrated food park and 300 MW hybrid renewable energy project in Gujarat I2U2 frame (India, Israel, USA and UAE).
• UAE cable and metal products manufacturer Ducab Group has opened a regional office in Bangalore, Karnataka, to better serve customers in the energy and construction industries.
• DP World has launched the Dubai Incubator Center in partnership with Invest India and Start-Up Kerala Mission. This is a technology accelerator platform focused on innovation in the logistics sector in India.
• Abu Dhabi Investment Authority is considering gift city, Gujarat.
• In February 2023, a UAE delegation comprising officials, business leaders and entrepreneurs visited India to discuss cooperation and opportunities.

Also read: India-UAE Bilateral Trade: Trends and Prospects