The free trade agreement (FTA) signed between India and the United Arab Emirates (UAE) on Friday will allow companies to access government procurement processes for the first time, which will further open up investment opportunities for both sides, UAE minister of economy Abdulla bin Touq Al Marri told Mint in an email interview.
He said both countries stand to benefit from the comprehensive economic partnership agreement (CEPA), the first major trade deal to be signed by the Narendra Modi government.
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While companies based out of the UAE will get easy access to the fifth-largest economy in the world, and its booming middle-class, India’s construction, logistics, infrastructure, renewable energy, and telecom industry will receive massive investments. Edited excerpts:
The CEPA signed today between India and the UAE removes tariffs on 80% products. Do you see any scope to scale it up further?
With tariffs removed on 80% of the products, there is not much room. But we hope to reach 100% over the course of the next few years. The whole point of the CEPA is to improve market access for our businesses in both countries. The entire process has been about levelling the playing field. The tariff elimination covers key sectors such as aluminium, copper, steel, polyethylene, polypropylene, and other goods and services from different sectors. But it’s important to note that we have tried at all times to ensure the CEPA benefits both sides.
How will it help businesses and investments for both countries? In which sectors are UAE investors looking to invest in India?
The UAE and India are enjoying a number of high-level joint-ventures in priority sectors, reflecting the urgency of developing solutions in areas such as solar power, food security, logistics infrastructure, telecoms and advanced technology. So, we do see those collaborations accelerating with more avenues for expansion. But this deal will allow the private sector to dictate where the opportunities lie. By reducing tariffs on 80% of products, this is about accelerating the flow of goods and services, and encouraging collaborations and joint ventures. We are offering particular support for small and medium enterprises, which are the backbone of both economies.
Is government procurement also part of the trade pact?
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Yes, for the first time, companies will be allowed to access the government procurement process of both countries.
What sectors will particularly benefit from the CEPA?
It’s important to point out that this deal has been structured to ensure maximum benefits to both parties. For instance, the tariff elimination covers key sectors such as aluminium, copper, steel, polyethylene, polypropylene, and other goods and services from different sectors. A total of 11 services sectors and over 100 sub-sectors were part of the negotiations, including business services (such as professional services, computer accounting, real estate, advertising packaging), telecommunication, construction and related services, education, environment, finance, insurance, health-related and social services, tourism and travel-related services (hotel travel agencies); recreational, cultural and sporting services, and transport services (maritime, air transport services, and airport services and repair).
With India looking to make substantial gains in trade and investments through this bilateral deal, what does UAE stand to gain?
The CEPA has been structured to benefit both parties. We don’t see this as one side gaining and the other losing. From the UAE perspective, it is part of a bold series of initiatives to pave the way for the next 50 years of growth and opportunity. The goal was clear: to double the size of the economy from AED 1.4 trillion to AED 3 trillion (dirham) by 2030. This required bold new strategies for diversification. Also, as a response to the global pandemic, we understood the need to rebuild our trade partnerships, to accelerate the free flow of goods, strengthen supply chains, increase trade volumes to and from the UAE, enhance our status as a facilitator of global trade, and accelerate investment and joint-venture opportunities. The CEPA is a crucial part of our strategy to re-engineer our economy to meet the challenges of the post-covid world and create a dynamic, resilient and future-proof economy.
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