India and the United Arab Emirates (UAE) signed a free trade agreement (FTA) on Friday, which will lower tariffs on 80 percent of commodities and offer 90 percent of India's exports to the UAE duty-free access.
The pact, which is anticipated to take effect in about 60 days, is estimated to increase annual bilateral commerce to $100 billion in five years, up from roughly $60 billion now. After 88 days of discussions, Commerce and Industry Minister Piyush Goyal and UAE Minister of Economy Abdulla bin Touq Al-Marri signed the Comprehensive Economic Partnership Agreement.
"This comprehensive economic partnership agreement encompasses a wide range of benefits for both economies and gives commercial possibilities in both economies," Goyal added. The deal, according to the Minister, will improve exports in a number of labor-intensive industries, including gems and jewelry, textiles, leather, footwear, sports products, engineering items, and pharmaceuticals. India's annual exports worth roughly $26 billion, which are now subject to a 5% import charge in the UAE, are expected to profit.
Goods, services, rules of origin, Customs processes, government procurement, intellectual property rights, and e-commerce are all covered under the agreement. "I am convinced that the UAE-India Comprehensive Economic Partnership Agreement will be considered as a landmark achievement, ushering in a new era not only for our two countries but for world commerce," Al Marri said, noting that both countries had eliminated tariffs on over 80% of products.
According to a Commerce Ministry official, more tariff concessions on both sides are planned over the next five years, resulting in lower rates for 98% of UAE exports and 90% of UAE imports. Electronic goods, chemicals and petrochemicals, cement, ceramics, and machinery, which represent around 9% of India's current exports to the UAE, are scheduled to receive zero-duty access during the next 5 to 10 years.
"We've offered tariff concessions to UAE on gold, and they've abolished taxes on jewelry," Commerce Secretary B V R Subrahmanyam said, citing an example of tariff reduction. According to sources, India has agreed to lower import tariffs on gold imports up to 200 tonnes per year. In FY21, India purchased roughly 70 tonnes of gold from the United Arab Emirates.
Goyal said the agreement includes strict rules of origin to protect both economies from third-party abuse, such as a need for steel exports to be "melt and pour" to qualify as domestically made items in either nation. According to Goyal, the deal also includes a permanent safeguard mechanism to protect both countries' firms from "any superfluous or unjustifiable rise in volumes of (imports) any particular commodity."
For the first time, the UAE has agreed to speed up market access and regulatory approval for Indian pharmaceutical and medical products have been approved in developed countries like the United States, the United Kingdom, the European Union, Canada, and Australia within 90 days of signing the agreement.
The strengthening of India's ties with the UAE, according to Goyal, will assist Indian exporters to gain access to other West Asian countries, Africa, and parts of Europe.