Answer By law4u team
The India-UAE Comprehensive Economic Partnership Agreement (CEPA) is a landmark trade pact signed on February 18, 2022, and came into effect on May 1, 2022. This agreement aims to enhance bilateral trade and economic cooperation between India and the United Arab Emirates (UAE) by reducing tariffs, improving market access, and fostering investment and services collaboration.
Key Provisions and Objectives:
Tariff Reduction and Market Access:
The CEPA eliminates or reduces tariffs on over 80% of India’s exports to the UAE and more than 90% of UAE’s exports to India.
Immediate zero-duty access is provided to nine major sectors, including textiles, engineering products, gems and jewellery, pharmaceuticals, and medical devices.
Services Sector Liberalization:
The agreement facilitates enhanced market access for service providers in sectors such as healthcare, education, IT, and audio-visual services.
It streamlines licensing procedures and removes regulatory barriers, encouraging collaboration between Indian and UAE service providers.
Investment Cooperation:
CEPA liberalizes investment regulations, attracting foreign direct investment (FDI) in sectors like infrastructure, renewable energy, and logistics.
A transparent dispute resolution mechanism is established to ensure investor confidence and security.
Rules of Origin and Safeguards:
Clear rules of origin are defined to ensure that only goods genuinely produced in India or the UAE qualify for preferential tariff treatment.
A permanent safeguard mechanism is included to address sudden surges in imports and prevent trade diversion.
Joint Committee and Trade Facilitation:
A Joint Committee has been established to oversee the implementation of the CEPA and address any emerging trade issues.
Sub-committees focus on areas such as trade in goods, services, customs procedures, and trade facilitation.
Impact on Bilateral Trade and Economic Relations:
Trade Growth:
Bilateral merchandise trade has nearly doubled from $43.3 billion in FY 2020-21 to $83.7 billion in FY 2023-24.
Non-oil trade reached $57.8 billion in FY 2023-24, accounting for more than half of the total trade.
Sectoral Achievements:
Significant growth has been observed in sectors like smartphones, electrical machinery, chemicals, and refined crude oil products.
India’s exports to the UAE rose 6.82% to $30 billion during the first 10 months of FY 2024-25.
Employment Generation:
The CEPA is expected to create approximately 1 million jobs across various labor-intensive sectors in both countries.
Example:
In 2023-24, India's smartphone exports to the UAE amounted to $2.57 billion, reflecting the positive impact of the CEPA on India's export sectors.
Steps Taken by Both Countries:
Establishment of Joint Committee:
Both governments have set up a Joint Committee to monitor the implementation of the CEPA and resolve any trade-related issues.
Issuance of Certificates of Origin:
Over 240,000 Certificates of Origin have been issued, facilitating exports worth $19.87 billion to the UAE under the CEPA.
Sectoral Initiatives:
Initiatives such as the establishment of an India Mart in the Jebel Ali Free Zone and investment zones in Abu Dhabi focus on sectors like agri-tech, logistics, and renewable energy.
