Financial Express | 5 May 2022
Free Trade Agreement: India keeps 1,157 sensitive items out of UAE FTA ambit
India has kept as many as 1,157 sensitive products from key sectors, including dairy, automobiles, medical devices, consumer electronics and agriculture, out of the purview of its free trade agreement (FTA) with the UAE that came into force from May 1.
According to FAQs prepared by the commerce ministry on the FTA, the products from the UAE that won’t be eligible for duty-free entry into India include all dairy items, most automobiles and components, fruit, cereals, sugar and food preparations, tobacco products, dyes and pigments, natural rubber, tyres, and processed marble, TVs, toys, footwear, instant coffee and petroleum waxes. Even gold jewellery beyond the annual quota of 2.5 tonnes will be subject to the regular customs duty of 20%.
The Comprehensive Economic Partnership Agreement (CEPA) will likely benefit about $26 billion worth of Indian exports that were subjected to 5% duty by the UAE.
FE had in March reported that New Delhi has kept several sensitive products, including dairy and farm items, out of the FTA’s ambit and that $26-billion worth Indian exports will stand to gain from the duty relief granted by Abu Dhabi under the FTA.
The FTA also provides for stringent product-specific rules of origin, which requires substantial value addition (up to 40%) in the UAE for obtaining duty relief here. The certificate of origin will be issued by the ministry of economy of the UAE to avoid contravention of the rules of origin criteria.
In certain cases, India has agreed on phased reduction of duties. For instance, New Delhi, which taxes bovine meat and chicken imports at 30%, will trim the duty to 27% in the first year of the FTA, followed by a phased reduction of 300 basis points each year until it reaches 15%. Buffalo meat alone contributed about $2.8 billion to India’s farm export kitty until January last fiscal. Of course, in some other meat segments where it’s not a big player, the duties will be abolished immediately.