India and the UAE enjoy excellent bilateral relations. The relationship is deep rooted and historical and has been nurtured over centuries by close cultural and civilisational contact, trade, high-level political interaction and vibrant people-to-people linkages.
Today, their bilateral relations are multi-faceted. Rapidly growing India-UAE economic and commercial relations contribute to further deepening these ties. India and the UAE have been among each other’s leading trading partners. India-UAE bilateral trade, which was valued at $180 million per annum in the 1970s, has leapfrogged to $85 billion this year.
Both nations have signed a Comprehensive Economic Partnership Agreement (Cepa) on February 18, 2022, during a virtual summit between Prime Minister Narendra Modi and President Sheikh Mohamed. The agreement entered into force on May 1, 2022. This historical agreement has unleashed immense opportunities in bilateral trade, and it is expected to increase the bilateral trade in goods to $100bn within five years and trade in services to $15bn.
It was remarkable that this wide-ranging and ambitious agreement was negotiated in just 88 days. It reflects the mutual trust and collaboration of more than five decades between our two great nations. The Cepa has ushered a paradigm shift in our bilateral relations and unlocked new opportunities in bilateral trade and investments. Built on three pillars of trust, transparency and talent, the agreement will benefit both nations.
The historical India-UAE Cepa was the first bilateral trade agreement of its type concluded by the UAE, and India’s first bilateral trade agreement in the Mena region.
It is a wide-ranging agreement, covering all aspects of India’s economic engagement with the UAE, including trade, investments, health care, digital trade, government procurement and intellectual property rights, among other things.
India-UAE economic engagement is multi-dimensional and rapidly growing. The UAE has consistently remained India's third-largest trading partner and the second-largest export destination for Indian products. For the UAE, India is the second-largest trading partner. The UAE is also the seventh-largest investor in India, with an estimated investment of $18bn. Moreover, India and the UAE have entered into a memorandum of understanding whereby the UAE has committed to investing $75bn in infrastructure development in India.
Further, in October 2021, the Government of Dubai signed an MoU with the Union Territory of Jammu and Kashmir for real estate development, industrial parks, logistics, a medical college and hospital. At the recently concluded Uttar Pradesh (UP) Global Investors Summit, many UAE businesses signed MoUs with the UP government to invest in health care, logistics and food parks. Several other significant partnerships have also been launched since May 2022 related to energy, food security, education and health care. The UAE-India Cepa is a major trade agreement to transform bilateral economic, trade and investment ties and propel economic growth. The agreement also promises to be a gateway for the Indian exporters to emerging economies in the Middle East and Africa.
The agreement entered into force in May 2022, has been operating smoothly for nearly a year now. The fact that Cepa was negotiated and signed during the Covid-19 pandemic indicates that this deal was very much necessary in a challenging global economic environment. The impressive overall growth in bilateral trade is a true reflection of the early gains accruing from the agreement.
During the 11-month period from April 2022 to February 2023, bilateral trade between our two countries grew to $77.6bn from $65.1bn in the same period a year earlier, recording an impressive growth of 19.2 per cent. During this period, India’s exports to the UAE saw a remarkable growth of 15.3 per cent, reaching $28.76bn from $24.95bn the year before. The impressive growth in bilateral trade will have resulted in many new job opportunities in both countries, especially the growth in India’s exports, which has happened in labour intensive sectors like gems and jewellery, as well as the food and agricultural sectors.
On February 18, 2023, a year after the Cepa’s signing, Dr Thani Al Zeyoudi, UAE Minister of State for Foreign Trade, and I launched the UAE India Business Council-UAE Chapter (UIBC-UAE), in the presence of its founding members. The UIBC-UAE is the counterpart of UIBC India, which was established at New Delhi in 2015. It brings together key partners and stakeholders from both countries and is poised to play a crucial role in supporting both governments in maximising the potential of the UAE-India economic relationship.
The path-breaking UAE-India Cepa is not only a significant turning point in the bilateral economic relations, but it will be seen as a well-established model for international economic collaboration.
