CEPA to strengthen trade, give India access to a wider market, says UAE

CEPA-style agreements are part of the UAE's new trade policy (Image: Reuters)

India is a key trading partner and will find "gateway access" to Middle Eastern, north African and European markets with the CEPA coming into force, the UAE has said ahead of the first West Asia “Quad Summit” on July 14.

CEPA or the Comprehensive Economic Partnership Agreement was inked between India and the United Arab Emirates earlier this year and came into effect on May 1. Both countries are also members of the so-called West Asia Quad, with the US and Israel as the other two partners.

"It is the biggest bilateral trade pact between two major economies, which is set to go down in the history as a real game changer," Abdalla AlSaleh, undersecretary in the UAE's ministry of economy, told Moneycontrol in an email interview.

The agreement had the potential to take the UAE’s non-oil trade with India to above $100 billion from the current $40 billion within the next five years, he added.

"More specifically, it is set to increase UAE exports by 1.5 percent by 2030, valued at $7.6 billion and increase UAE imports by 3.8 percent by 2030, valued at $14.3 billion," said AlSaleh, who at present is the senior-most official in the economy ministry.

Growth partners

CEPA-style agreements were part of the UAE's new trade policy, AlSaleh said, adding that it was only fitting that India, "one of our oldest and most trusted allies", became the first partner to sign the agreement.

"India will continue to be one of our most prominent partners in growth over the next 50 years as well," he said.

CEPA, apart from boosting the trade ties between the UAE and India, would also offer New Delhi greater access to the markets in the Middle East and North Africa (MENA) as well as Europe.

"India stands to benefit from improved access to a key global market for manufacturing goods, digital technologies, industrial machinery, domestic appliances and precious metals and gemstones, and a seamless gateway to rapidly growing economies in the Middle East, Africa and Europe," AlSaleh said.

Days before CEPA came into effect, India's Reliance Industries and Abu Dhabi National Oil Company announced a $2-billion joint venture for a petrochemical production facility in Ruwais, a city 240km west of Abu Dhabi.

"It is certainly an important moment in bilateral relations—and it points to the type of investment flows that the CEPA will now be able to accelerate," AlSaleh noted.

The UAE was not only looking to attract more foreign investments but also workers, including those from India.

"We are keen to attract more Indian talent to our shores—particularly professionals, innovators and entrepreneurs operating in the new economic sectors including technology—to capitalise on the incentives and facilities offered by our economy to advance their projects and ventures," AlSaleh said.

The benefits included granting of 100 percent foreign ownership, revamped visa and residency system, reduced cost of doing business, access to new markets, and opportunities to expand trade, he said.

CEPA would over the years lead to the generation of "millions of jobs", he said. The agreement would provide a platform for small and medium enterprises in the two countries to expand internationally by granting them access to new customers, networks and avenues of collaboration, he said.

The agreement also covers 11 service sectors and more than 100 sub-sectors, including real estate, advertising, communications, building and construction, insurance, travel and tourism, among others.

"As a result, trade in these sectors on both sides is likely to grow substantially, boosting investment in supportive smart and specialised supply chain networks that can address their specific needs and so on, giving rise to millions of jobs," AlSaleh said.

Conceived along the lines of the quadrilateral coalition of the United States, India, Japan and Australia, known as the Quad, the International Forum for Economic Cooperation was set up in 2021 and is better known as the “West Asia Quad”. Prime Minister Narendra Modi will attend the India-Israel-UAE-US (I2U2) Summit virtually.