New Delhi: As the UAE-India Comprehensive Economic Partnership Agreement (CEPA) reaches its second anniversary, ETV Bharat explores the significance of India-UAE CEPA in the changing global dynamics as bilateral trade between the two nations has surged by 16 per cent over the past two years.
The India-UAE CEPA holds immense geopolitical significance, given the strategic locations of both countries and their roles as major players in their respective regions. Strengthening economic ties can contribute to stability and prosperity in the broader Indo-Pacific region.
Against the backdrop of evolving global trade dynamics, characterised by the rise of digital trade, sustainability concerns, and changing consumer preferences, CEPA provides an opportunity for India and the UAE to address modern trade challenges and align their economic policies accordingly.
Over the years, India and the UAE have been strengthening their strategic ties beyond traditional diplomatic relations. Signing a comprehensive economic agreement deepens this partnership by fostering stronger economic collaboration.
To gain insights on the significance of CEPA, through his expert comments, ETV Bharat spoke to Ambassador Anil Trigunayat who served as India’s ambassador to Jordan, Libya and Malta. He said, "India-UAE CEPA is the first one with the region and has already shown results and greater potential for enhancing trade and economic engagement. This could also provide a template for the India-GCC FTA (India and the Gulf Cooperation Council free trade agreement)currently under discussion. Discussions with Oman on similar lines are underway. CEPA will also add to the attractiveness of IMEC eventually for businesses and trade".
It is pertinent to note that both India and the UAE are seeking to diversify their trade partners amid shifting global dynamics, including rising protectionism in some regions and geopolitical tensions. CEPA allows them to reduce dependence on traditional markets and explore new avenues for trade and investment.
The agreement contributes to regional economic integration by facilitating smoother trade flows and investment between India and the UAE. This integration aligns with broader efforts in the region to promote economic cooperation and stability.
CEPA typically includes provisions to protect and promote investments between the two countries. This can attract more foreign direct investment (FDI) by providing investors with greater certainty and transparency regarding investment rules and regulations.
However, against the backdrop of evolving global trade dynamics, characterised by the rise of digital trade, sustainability concerns, and changing consumer preferences, CEPA provides an opportunity for India and the UAE to address modern trade challenges and align their economic policies accordingly. It not only deepens bilateral economic ties but also contributes to regional integration, promotes investment, and aligns with broader geopolitical and economic shifts.
The UAE embassy in New on Tuesday said that the CEPA has spurred advancements in trade, with bilateral exchanges increasing from USD 72.9 billion (Apr 21-Mar 2022) to USD 84.5 billion (Apr 22-Mar 2023) registering a year-on-year increase of 16 per cent.
"Major Indian export sectors have benefited considerably since the implementation of the CEPA, with the export of Indian gems and jewellery to the UAE expanding by almost 64 percent in only two years. While other critical Indian export sectors, such as drugs and pharmaceuticals, and fruit and vegetable products have also experienced considerable growth, increasing by almost 39 per cent and 35 per cent, respectively,” it added.
Further, commenting on India's West Asia policy in the last few decades, Trigunayat noted that the UAE has emerged as the lynchpin of India’s Act West-Act Fast policy and its expanding engagement with the Gulf region. In particular, it plays an indispensable role in India’s move towards a more regional and sub-regional approach even as it continues working assiduously in the bilateral matrix. That includes groupings such as India, Israel, UAE, USA (I2U2) and India, UAE, Saudi Arabia and USA (IUSU) where key projects are moving apace in the food and energy security domains.
"The UAE remains a major investor in India and it is also the country’s third largest trading partner. It was also the first country with which India signed the Comprehensive Economic Cooperation Agreement (CEPA) in 2022. This agreement is a trendsetter because of the short time of 88 days in which it was negotiated and concluded and it has already begun to show positive results", he said, adding "A Bilateral Investment Treaty was also signed during Prime Minister Narendra Modi's recent visit to the UAE. That would take the India-UAE relationship to the next level. In the energy domain, the UAE became the first country to invest in India’s strategic crude".
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