India inks free trade deal with UAE, eyeing $100bn in trade
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Nikkei Asia | 19 February 2022
India inks free trade deal with UAE, eyeing $100bn in trade
by KIRAN SHARMA
NEW DELHI - India and the United Arab Emirates signed on Friday a comprehensive economic partnership agreement that promises to nearly double trade between the two nations to $100 billion in the next five years.
Via the deal, New Delhi hopes that the UAE can serve as a gateway to other markets in West Asia, Africa and Europe.
Formal negotiations on the pact were launched just a few months ago in late September, and the final deal was signed during a virtual summit between Prime Minister Narendra Modi and Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan.
"I’m confident that this pact will usher in a new era in our economic ties and take bilateral trade to $100 billion from the current $60 billion in the next five years," Modi said during the summit as his commerce and industry minister Piyush Goyal and the UAE’s visiting economy minister Abdulla bin Touq Al Marri signed the agreement.
The 881-page document covers a wide range of sectors such as goods, services, investment, intellectual property regime, small and medium enterprises, digital trade and sustainability, Goyal said, addressing a press conference after the summit. He added that "almost 90% of the trade both ways ... will get significant benefits from this [pact]."
Goyal called India and the UAE "natural partners" who complement each other, with hardly any element of competition. "We are both for rules-based fair trade [and] believe this [agreement] covers a wide array of gains for both economies," he said.
Some of the major sectors that will benefit in India are gems and jewelry, textiles, leather, plastic, medical devices and automobiles.
"Most of these sectors are largely labor-oriented" and this agreement will open a million job opportunities for the youth of the country, Goyal said, pointing out that the UAE’s sectors such as metals, minerals, petrochemicals, petroleum products and others will also benefit from the huge Indian market of over 1.3 billion people.
"The [pact with the] UAE will certainly help us gain access to other countries in the West Asian region, the entire African continent and some parts of Europe [which are] very closely linked with the UAE," he said, adding that the Gulf nation is "like a gateway for a very large region for Indian exporters."
On his part, the UAE economy minister said the agreement will eliminate or reduce tariffs on more than 80% of goods traded between the two countries.
The UAE is India’s third-largest trade partner, accounting for about 40% of the South Asian nation’s trade with the Arab world.
By signing this agreement, the two sides are writing "a momentous new chapter" in their shared history, Al Marri said. "The fact that we were able to agree to terms of the deal of this size, scope and importance within five months demonstrates the power of our shared vision."
The pact will help the UAE add 1.7%, or $8.9 billion, to its national GDP by 2030, he pointed out.
Modi and the Abu Dhabi crown prince also issued a "joint vision statement" which establishes a roadmap for a future-oriented partnership between the two sides, with the shared objective to promote new trade, investment and innovation in diverse sectors, including economy, energy, climate action, emerging technologies, food security, health care and defense.
"The UAE is one of India’s key energy providers and remains committed to meeting India’s growing energy demand," the vision statement said. "Further work will be undertaken to identify new collaboration opportunities to support India’s energy requirements, including new energies, and ensure the provision of affordable and secure energy supplies to India’s growing economy."
India, which walked out of the Regional Comprehensive Economic Partnership in late 2019 fearing an influx of cheap agricultural and industrial goods, is negotiating bilateral free trade agreements with several other countries including the U.K and Australia.
The pact with the UAE, which is India’s first such trade deal with the Gulf region, is expected to come into effect in the first week of May.
