India and the United Arab Emirates on Wednesday announced the launch of the negotiations for a mutually beneficial Comprehensive Economic Partnership Agreement (CEPA) with the aim to end talks by the end of this year and sign a formal agreement in March next year.
The first round of negotiations for an early harvest under the CEPA will be held on September 23-24.
The pact is expected to increase bilateral trade in goods to $100 billion within five years of the signed agreement and that in services to $15 billion but that projection is now being reassessed.
“The two sides have drawn up a very ambitious and aggressive timeframe and aim to conclude negotiations by December 2021 itself and we hope to sign a formal agreement in the early part of 2022 after the completion of internal legal procedures…We are negotiating an aggressive bilateral agreement,” commerce and industry minister Piyush Goyal said.
The UAE is currently India’s third-largest trading partner with bilateral trade in FY20 at $59 billion. It is also India’s second-largest export destination after the US, with exports valued at $29 billion in FY20. India was the UAE’s second-largest trading partner in 2019, with bilateral non-oil trade valued at $41 billion.
The Indian trade minister said that the two sides will cooperate on trade remedial measures.
“We will identify focal points within the discussions of the free trade agreement, and the early harvest component of the FTA whose negotiations will start from tomorrow,” Goyal said.
Thani bin Ahmed Al Zeyoudi, UAE’s Minister of State for Foreign Trade, who is visiting India, said that investment protection agreements were discussed during the meeting and another meeting is expected to take place in a week in which big sovereign wealth funds from the UAE and other business would participate.
Mutual Recognition Agreement of testing labs, customs facilitation, data exchange and investment pacts are the other benefits that India is eyeing through the pact.
“This will be a beneficial pact especially for India’s asset monetisation plans as investment from UAE will get priotity and they will get comfort and confidence,” Goyal said.
While India has been in talks with the UK, Australia and the EU to ink trade pacts, Goyal said that the UAE was the most responsive and proactive.
“The tight timeline is beneficial and offer reciprocal benefits to both… this partnership will be owners’ pride and neighbours’ envy,” Goyal said.
Goyal said that the two sides have decided on those items where there is clear competitive and comparative advantage as part of the early harvest.
“They will be looked upon as low hanging fruits and have them agreed upfront. Along with the framework of the FTA, we will have early harvest component where items of immediate interest will kick in much faster,” Goyal said, adding that the items of interest for India include textiles, gems and jewellery, footwear, leather products and handicrafts.
Besides duty concessions, Indian industry has suggested recognition of its products in the UAE.
Goyal said that the UAE’s strategic location, trade with Africa and its various trade pacts can help India become part of that supply chain especially in handlooms, handicrafts and pharma.
“We want to capitalise on our strengths- medical equipment, advance industrial sectors, pharma, fin tech, ICT, space,” Al Zeyoudi said.
Among items, petrochemical equipment is the UAE’s area of interest.
India’s major exports to the UAE include petroleum products, precious metals, stones, gems and jewellery, minerals, food items such as cereals, sugar, fruits and vegetables, tea, meat, and seafood, textiles, engineering and machinery products, and chemicals. India’s top imports from the UAE include petroleum and petroleum products, precious metals, stones, gems and jewellery, minerals, chemicals and wood and wood products. India imported $10.9 billion of crude oil from the UAE in 2019-2020.
The UAE is the eighth-largest investor in India, having invested $11 billion between April 2000 and March 2021, while investment by Indian companies in the UAE is estimated to be over $85 billion.Internet Explorer Channel Network