India and the United Arab Emirates (UAE) share a long-standing trade relationship that has grown rapidly in recent years. The two countries took this partnership to the next level by signing the Comprehensive Economic Partnership Agreement (CEPA) on 18th February 2022. It came into effect on 1st May 2022 and aimed to deepen economic ties between the two nations and significantly promote bilateral trade and investment relations.
What is CEPA?
Comprehensive Economic Partnership Agreement (CEPA) is a bilateral agreement that establishes a framework for promoting economic relations between India and the UAE. It includes provisions related to trade in goods and services, rules of origin and customs procedures, Intellectual Property Rights (IPR), Sanitary and Phytosanitary (SPS) measures, government procurement, Technical Barriers to Trade (TBT), digital trade, investment facilitation, along with dispute settlement and cooperation in other areas.
Features of CEPA
CEPA covers a wide range of areas, including trade in goods, services, investment, and intellectual property rights. Some of the key features of CEPA are:
• Customs Duties: The agreement eliminates customs duties on over 2000 products, covering 90% of the trade between India and the UAE, covering sectors such as textiles, leather, sports goods, furniture, agricultural and wood products, medical devices, automobiles, and more.
• Trade in Services: CEPA aims to enhance market access for services providers in sectors such as IT, healthcare, construction, education, and tourism. Also, the deal provides liberalization of trade in services, including financial services, telecommunications, and professional services.
• Investment: The deal promotes and protects investment by establishing a framework for investment protection, non-discrimination, and dispute resolution. It will provide a predictable and stable environment for investors, which will encourage more foreign investment in both countries.
• Intellectual Property Rights: It provides a framework for the safeguarding and enforcement of intellectual property rights, including patents, trademarks, and copyrights, which is important for businesses that operate in India and the UAE.
• Government Procurement: The bilateral pact facilitates greater access to government procurement markets for Indian and UAE companies, which will lead to equal opportunities in government tenders in both countries.
Advantages of CEPA for India & UAE
The Comprehensive Economic Partnership Agreement (CEPA) is expected to have several benefits for India and UAE. Let's dig in a bit to find out what both countries will gain from it:
• Increased Trade: The agreement expects to take the bilateral trade between the two nations to new heights, with India-UAE trade to grow by over $ 100 billion and trade in services to grow by over US$ 15 billion within 5 years. However, the trade between both nations is already growing at a rapid pace, where in 2020-21, their bilateral trade stood at USD 43.3 billion.
• Boost Investment: CEPA will provide a stable and predictable framework for investment, which will boost investment flows between the two countries, especially in sectors such as infrastructure, energy, and manufacturing. Also, it'll give Indian firms greater opportunities to invest in the UAE and tap into its vibrant economy.
• Job Creation: Increased trade and investment are expected to create jobs in both India and the UAE. As per a report by the Confederation of Indian Industry (CII), CEPA could create up to 100,000 jobs in India. At the same time, CEPA is estimated to add 140,000 skilled workers to the UAE's talent pool by 2030.
• Greater Cooperation: This will lead to the greater movement of professionals and skilled workers between India and the UAE, leading to greater collaboration in sectors such as IT, healthcare, education, and tourism. The CEPA will make countries set up a technical council on investment, trade promotion, and facilitation led by representatives of both governments, which would promote and monitor trade and investment flows between the two countries.
• Strengthen Bilateral Ties and Regional Integration: CEPA is a significant milestone in the India-UAE relationship, which has been marked by close economic, political, and cultural ties. The agreement will further strengthen bilateral ties and deepen cooperation between the two nations. Also, it will pave the way for greater regional integration, as India and the UAE can use their partnership to expand economic cooperation in the broader Middle East and South Asian region.
The CEPA agreement between India and UAE is expected to bring significant benefits to both countries. It will provide a framework for boosting trade and investment flows, promoting economic growth, and creating employment opportunities. It will also address non-tariff barriers to trade, facilitate market access, and enhance cooperation between the two countries. Overall, the CEPA agreement is a positive step towards strengthening economic ties between India and UAE and promoting greater economic integration in the region.