India and the UAE enjoy strong cultural and economic relations. The two countries are also each other’s key trade partners with robust trade and investment in various sectors. The Cepa has added a new momentum to this relationship. This agreement is beginning to deliver on the shared vision of the leaders which was to see our bilateral economic and commercial exchanges growing exponentially in the years to come. In that sense, the near-record breaking export figures to the UAE come as no surprise. It is heartening to note that these trade gains have been broad based.
Many sectors, including labour-intensive ones such as gems & jewellery, engineering products, automobiles, food products, and chemical products have already experienced significant gains from this landmark agreement. On the employment front, the Cepa is anticipated to create more than 1 million jobs in India in the near future.
The Cepa is a historic agreement of strategic significance to both the partners. While creating a conducive trade ecosystem for businesses in both the nations, this agreement is helping the already strong bilateral relationship to be transformed into a new age, future-ready partnership connecting the visions of the leadership of our two friendly countries.
The true complementary nature of this strong economic partnership is now being realised by the two countries. Our bilateral merchandise trade has recorded around $84 billion in FY 2022-23, registering an increase of 16 per cent year on year. The overall growth in bilateral trade reflects early gains accruing from the agreement. We had set ourselves a five-year bilateral trade in goods target of moving from $60 billion (pre-Cepa trade figure) to $100 billion.
With a phenomenal performance in the first year itself, I believe we could look at revising these targets upwards. Trade gains in the initial post-implementation phase of the Cepa are just the beginning; there are still a large number of opportunities for cooperation among two nations in key sectors such as infrastructure and technology. Post-Cepa, both sides are expected to continue push for expanding the boundaries of collaboration.
Covid has taught the whole of humanity a number of lessons; one amongst them is that we cannot deal with the complex and evolving challenges of the New Age in isolation. We need to work together and collaborate more closely than ever. I am glad that with great partners like the UAE, we are already moving ahead on these lines to forge multiple partnerships covering the entire gamut of our bilateral relations, be it in the domain of food and energy security, climate, trade and investments. Covid has also front-loaded the debate on reconfiguration of supply chains; in this context, India, with its favourable business environment, liberal FDI norms, constantly improving ease of doing business, rapidly improving physical and digital infrastructure, and the visionary and decisive leadership of Prime Minister Modi, has been largely acknowledged to play a key role in the reconfigured supply chains and emerge as a global manufacturing hub and a reliable partner.
India and the UAE have a shared vision to forge a partnership that is future ready with special focus on cooperation in newer & emerging areas like sustainability, climate action, innovation, digitalization, startups, food and energy security, health, fin-tech and skilling. Exploration of initiatives like establishment of efficient and integrated Single Window Solutions and Virtual Trade Corridors to reduce the cost and time involved in trade and investment related procedures is a part of this initiative. Creation of a virtual trade corridor is expected to facilitate quicker clearance of shipments as the approvals and clearances related to customs will be given online on both sides. There are no definite timelines set but we intend to execute these on a priority basis.
The Cepa has acted as a catalyst to the bilateral trade between India and the UAE since being formalised in May 2022. Many NRI businessmen have welcomed this pathbreaking deal, emphasising that the deal would take the economic and commercial engagements to the next level. This trade agreement will enable NRI businesses to improve their competitive positioning and offering to the wider Middle East and African markets as they would have access to duty free imports from India under this agreement.
Further, the Cepa has opened many other new avenues of collaborations between the businesses of the two nations. Promoting cooperation between the trade ecosystems of the two countries is a major focus of the agreement. The India-UAE startup bridge is a pivotal initiative taken in this direction. The bridge will act as a one-stop platform where information regarding the Indian and UAE startup ecosystem will be easily accessible to entrepreneurs and stakeholders from both countries. It will further consolidate the close relationship that the two countries have had over the past few years.
Over the past few years, there has been a substantial rise in the number of regional trade agreements among the WTO members. India-UAE Cepa is amongst the fastest negotiated bilateral comprehensive free trade agreements. It was concluded in a record span of 88 days. Trade agreements address the growing aspirations of like-minded trade partners and are done under the relevant enabling provisions of the WTO. In a sense, these RTAs complement the work done at a multilateral level in facilitating enhanced flow of goods and services between countries.
What are the developments in agritech and other food-related investments between the two sides?
Domestically, through its Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY) scheme which ensures distribution of free-of-cost wheat and rice to over 800 million people, India has been running the world’s largest food support programme – a testament to our commitment to food security. As a leading global producer of agriculture products, India is also committed to play the role of a trusted partner in bilateral, regional and global value chains related to food sector. There have been many encouraging developments as far as bilateral cooperation in this crucial sector is concerned. The UAE’s private-sector has investments to the tune of $2.5 billion in renewable energy, logistics, retail, and food processing projects in India’s most populous state, Uttar Pradesh. Amongst the several other significant partnerships launched since May 2022 are the sustainable food parks across India that will utilise advanced technologies to reduce waste and conserve water. Discussions between the two sides are also ongoing on the Food Security Corridor Initiative with intended investments of $2 billion from the UAE, which is expected to not only ensure food security in the UAE but also take forward India’s presence on the global food value chain.
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