India-UAE FTA to be finalized by March 2022

The negotiations which commenced on September 23 will look to deepen the scope of bilateral trade between the two countries

October 25, 2021

To prevent misuse of the FTA, a 35% value addition component and a rules of origin clause are expected to be added.

The FTA will look to increase trade in the domains of gems and jewellery, engineering goods and textiles.

Bilateral trade is expected to increase from US$ 43 billion to US$ 100 billion between 2021-2026.

UAE is India’s eighth largest investor with investments amounting to US$ 11 billion between April 2000-March 2021.

As per media sources, representatives from India and the United Arab Emirates (UAE) expect to successfully complete the negotiations aimed at formalizing the Comprehensive Economic Partnership Agreement (CEPA) by March 2022. The negotiations which commenced on September 23 this year, will facilitate increased trade in engineering goods, textiles as well as gems and jewellery. The Indian delegation will work towards including a rules of origin clause as well as a 35% value addition component for select goods so as to prevent misuse of the components of the Agreements. When in effect, the Agreement will boost merchandise trade from US$ 43 billion to US$ 100 billion from 2021-2026. Services trade can be expected to increase to US$ 15 billion along the same timeline. The move will enable India to achieve the merchandise export target of US$ 400 billion in FY2022 and embark on “fair and balanced” trade agreements with other countries of strategic importance. 

India and the UAE have been trading extensively in commodities including precious metals, petroleum and petroleum products, chemicals, textiles, wood and wood products, engineering goods as well as textiles and garments. Steel products, textiles and garments as well as gems and jewellery contributed to 34% of India’s exports to the country in the previous fiscal year. The United Arab Emirates has invested US$11 billion in India during the April 2000-March 2021 period and is currently India’s eighth largest investor.