For its part, Abu Dhabi, too, has sought duty concession across broad range of products, including in food items such as dates and confectionary.
India and the UAE are set to grant each other duty-free market access in hundreds of products as they prepare to clinch a full-fledged free trade agreement (FTA) on February 18, in what is going to be New Delhi’s first such pact with any economy in over a decade.
The comprehensive economic partnership agreement (CEPA), as the FTA is formally called, will be announced by Prime Minister Narendra Modi and the crown prince of Abu Dhabi Sheikh Mohamed bin Zayed al Nahyan at a virtual summit. It will be followed by due processes of ratification by the two sides. Earlier, both the sides were aiming to sign an interim agreement first by December 2021, which was to be followed by a broader FTA by March 2022.
Sources told FE that India had identified more than 1,000 products across sectors, including gem & jewellery, textiles & garments, leather, spices, engineering goods, chemicals and poultry, where it wanted duty concessions from the UAE under the FTA. Both the sides started formal negotiations from September 23 last year.
While the UAE, India’s third-largest export destination, currently imposes a 5% duty on textiles & garments and jewellery, certain steel products are taxed at 10%. These three segments alone made up 34% of India’s $16.7 billion exports to the UAE last fiscal and 43% in the pre-pandemic year of FY20.
The UAE has also prohibited poultry imports from India on concerns of bird flu. Seeking the lifting of the ban, New Delhi has highlighted that it has been strictly adopting the safety norms stipulated by the World Organization for Animal Health.
For its part, Abu Dhabi, too, has sought duty concession across broad range of products, including in food items such as dates and confectionary.
Gem and Jewellery Export Promotion Council chairman Colin Shah said the proposed FTA will help drive up India’s gem and jewellery exports to the UAE to as much as $10 billion by FY23 from just $1.2 billion in FY21 (when the shipments were hit by the pandemic). The UAE accounts for 80% of India’s plain gold jewellery exports and 20% of its studded jewellery shipments. Abu Dhabi is also a gateway to the entire West Asian region, Shah said.
Both sides are aiming to raise bilateral merchandise trade to $100 billion in five years following the signing of the pact from about $43 billion in FY21. It also aims to more than double bilateral services trade to $15 billion during this period. The negotiations with the UAE are a part of India’s broader strategy to forge “fair and balanced” trade agreements with key economies and revamp existing pacts to boost trade. The move gained traction after India pulled out of the China-dominated RCEP talks in November 2019. India is also engaged in talks with Australia, the UK and the EU for FTAs.
