The UAE-India CEPA: A win-win deal

The United Arab Emirates (UAE)-India Comprehensive Economic Partnership Agreement (CEPA) in New Delhi on February 18 is a historic accord that came into being in the virtual presence of Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces His Highness Sheikh Mohamed Bin Zayed Al Nahyan and India’s Prime Minister Narendra Modi.

The agreement was signed by UAE’s Minister of Economy Abdullah Bin Touq al Marri and Indian Minister for Commerce and Industry Piyush Goyal. The CEPA is expected to double bilateral non-oil trade from $60 billion to $100 billion in the next five years.

In an Op-Ed for WAM, the Emirates News Agency, Minister of State Ahmed Ali Al Sayegh set the CEPA in context. He said that CEPA comes in the wake of the Comprehensive Strategic Partnership Agreement (CSPA) signed between the two countries in January 2017, which “set out an ambitious map for political and economic partnership.” The minister pointed out that UAE exports are the largest to India at $26.8 billion or 10.8 per cent of its total exports in 2019, UAE was the ninth largest foreign direct investment (FDI) source for India at $51 billion. The CEPA will help ease India’s exports to the UAE, and it will boost UAE’s FDI into India.

The minister asked, “What tangible benefits will the UAE-India CEPA offer?” And he answered it: “First, it will trigger increased investment flows, lower tariffs, and create enormous new opportunities for key sectors in both India and the UAE, including air transport, environment, investment, digital trade, and more.”

The minister referred to the many economic agreements signed between the UAE and India before the CEPA, and referred to Agreement on Avoidance of Double Taxation, an Agreement on the Promotion and Protection of Investment, and an Air Service Agreement. There is also the Joint Committee and UAE-India High-Level Taskforce on Group Investment. The immediate positive impact of the UAE-India CEPA has been that the Gulf Cooperation Council (GCC) is looking to conclude a similar CEPA with India.

The minister underscored the deep friendship that binds the two countries which is at the foundation of the UAE-India CEPA. He says in the Op-Ed: “Today, millions of Indian nationals working in the UAE form a vibrant community that has become an inseparable part of our national fabric.”

On the economic front, it is expected that the micro, medium and small enterprises (MSMEs) on both sides will benefit hugely from the CEPA because of the reduction in tariffs, and this will help boost tariff.

The long-standing trade relations between the two countries, both formal and informal, which had been flourishing for hundreds of years, are going to deepen with this agreement which makes the flow of goods from both sides. The UAE would serve as a gateway of Indian goods and services for the rest of the Middle East and North Africa (MENA) region. And the UAE will benefit from the investment opportunities that the expanding Indian economy provides. It is for this reason that the CEPA between the two countries has been described as a win-win situation.

The economic relations between the two countries rest firmly on a sense of trust, friendship between the peoples of both the countries. Indians in the UAE are the most valued, and UAE traders and investors are most at ease in doing business in India. It proves that economic partnership of the kind envisaged in the CEPA is possible because of the non-economic factors like political understanding and cultural bonding.

The UAE has been a friendly host to global workforce and global enterprises, which is the way to a future world economy. In many other countries, especially in Europe, the economic ties with countries outside Europe have been purely economic. But in the case of the UAE and India, the ties are not just economic. And that is why economic ties become so much more easy to improve.