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India-UAE Trade Pact

Feb 24, 2022


To enhance your UPSC exam preparation, in this series of our Current Affairs Dialog Box- News Gist's for UPSC, we will discuss about the India-UAE Trade Pact. 

It has relevance with Prelims preparation: Current Events of National and International Importance, CEPA, location of UAE, and with Mains preparation: India and its Neighbourhood, Bilateral Groupings & Agreements, India- UAE Relations.

Why in the News?

Recently, India and the United Arab Emirates (UAE) signed the Comprehensive Economic Partnership Agreement (CEPA) during a virtual summit.

Probable Question

India-UAE needs to tap the complementarity between their economies to mitigate the Covid-19 impact. Discuss

Key Points

  • The two countries signed a strategic partnership agreement in 2017.
  • CEPA aims to take bilateral trade to over $1 billion within five years, including in services.
  • India and UAE are also now part of economic relations focused, informally named “Middle East Quad”, in which the United States and Israel are also members.


  • India and the UAE established diplomatic relations in 1972. The greater push has been achieved in bilateral relations when the Indian Prime Minister visited the UAE in August 2015 which marked the beginning of a new strategic partnership between the two countries. 
  • Further, in January 2017, it was agreed that bilateral relations were to be upgraded to a Comprehensive Strategic Partnership.
  • This gave momentum to launch negotiations for an India­UAE comprehensive economic partnership agreement, eventually launched in September 2021.

Also read: How to Prepare International Relations for UPSC Mains

Key Highlights of the Meeting

  • Economic Partnership: 
    • Two countries welcomed the signing of the India-UAE Comprehensive Economic Partnership Agreement (CEPA).
    • They welcomed the establishment of a dedicated India Mart in Jebel Ali Free Zone.
    • India-UAE trade was around USD 60 billion making UAE, India’s third-largest trading partner for the year 2019-20 after China and the USA.
    • The UAE is the second-largest export destination of India with an amount of over USD 29 billion for the year 2019-20.
  • Cultural Cooperation: 
    • India and UAE agreed to set up an India – UAE Cultural Council to facilitate and promote cross-cultural cooperation.
  • Energy Partnership:
    • Through the Comprehensive Strategic Partnership, both countries have promoted and delivered significant investment opportunities, particularly in the field of energy.
    • The UAE is one of India’s key energy providers and remains committed to meeting India’s growing energy demand and is the first international partner to invest by way of crude oil in India’s Strategic Petroleum Reserves Program.
  • Climate Action and Renewables:
    • They also agreed to work closely in the contexts of COP, the International Renewable Energy Agency (IRENA), and the International Solar Alliance (ISA).
    • Both countries agreed to establish a joint Hydrogen Task Force to help scale up technologies, with a special focus on the production of Green Hydrogen.
  • Education Cooperation:
    • India and UAE agreed to establish an Indian Institute of Technology in the United Arab Emirates to establish world-class institutions that encourage and support innovation and technological progress.
  • Emerging Technologies:
    • Recognising the rapidly digitizing world, the two countries agreed to expand cooperation and collaborate on critical technologies and mutually promote e-businesses and e-payment solutions.
    • They agreed to collaborate to promote start-ups from both countries to expand into the two regions and utilize such platforms as a basis for growth.
  • Skill Cooperation:
    • India-UAE agreed to enhance their cooperation in order to develop a mutually agreed professional standards and skills framework. 
  • Cooperation in International Arena:
  • Defence and Security:
    • Discussing regional issues, they recalled the importance of maintaining and strengthening peace in the Middle East. 
    • They reiterated that dialogue and cooperation must be the cornerstone of a more integrated, stable and prosperous region, and India welcomed the outlook of the UAE in this respect. 

Also, watch our Weekly Current Affairs Masterclass For Prelims & Mains of February 2022- Week 1 by Prem Sodhani Sir, our DREAM TEAM faculty for Current Affairs:


About India-UAE CEPA

  • The Comprehensive Economic Partnership Agreement is a bilateral trade pact that will cover over a period of time 90% of India’s exports.
  • Scope of the Deal:
    • This will include leather, processed agriculture and dairy products, handicrafts, gems and jewellry, furniture, pharmaceuticals, food and beverages, engineering products and nearly the entire spectrum of items produced by the Indian economy.
    • Apart from the goods sector, it will also include the services sector. 
    • The deal has strong anti-dumping measures integrated into it which will prevent any country from dumping its products into the Indian market by using the route of the UAE.

Significance of the Trade Pact

  • The UAE, due to its strategic location, has emerged as an important economic hub not just within the context of the Middle East/ West Asia, but also globally. 
  • An export springboard: India is aiming to achieve the U.S. $1 trillion of merchandise exports and U.S. $1 trillion of services exports by the year 2030.
    • A trade agreement with the UAE could well be a springboard to realize these ambitious export targets.
  • Increase Remittances: The FTA will also increase remittances as Indian investments in UAE will bring Indian employees into the Gulf country.
    • The remittances are expected to rise with full economic recovery of the UAE’s post-pandemic economy.
    • According to a study, 82% of India’s total remittances originated from seven countries that included Gulf countries like the UAE, Saudi Arabia, Oman and Kuwait. 
    • In 2019, India received $83 billion from the Gulf region.
  • Increase the visibility of Indian products: This move will allow increased visibility of Indian products in the UAE. The reduction in tariff for Indian jewellery and gems will allow it to enter the UAE in greater volume.
  • Strengthening Export-oriented businesses: The FTA which covers almost 90% of exports will make it more attractive for Indian companies to invest in export–oriented businesses because of the zero-tariff facility that the UAE is expected to provide to Indian products.
    • Indian jewellery will get zero duty access which will increase exports. 
    • Most of the Indian exports similarly will benefit from the “zero tariff” that UAE is expected to grant. 
  • Entry to African market: This FTA with the UAE will pave the way for India to enter the UAE’s strategic location and have relatively easy access to the Africa market and its various trade partn­ers which can help India to be­come a part of that supply chain especially in handlooms, handicrafts, textiles and pharma.
  • Access to GCC (Gulf Cooperation Council) Countries: The UAE is a party to several regional and bilateral FTAs, including with countries in the GCC.
    • As part of the GCC, the UAE has strong economic ties with Saudi Arabia, Kuwait, Bahrain, and Oman, meaning the UAE shares a common market and a customs union with these nations.
India-UAE Trade Pact

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