India and the UAE are expected to sign a free trade agreement (FTA) on Friday, enabling both the nations to get duty-free access to a number of products from different sectors. With the UAE a transit port for many countries, the rules of origin and the percentage of value addition need to be laid out clearly in the agreement, analysts said.
The FTA will be signed on February 18 at a virtual summit between Prime Minister Narendra Modi and Crown Prince of Abu Dhabi Sheikh Mohamed bin Zayed al Nahyan.
“A major initiative in bilateral relations is the Comprehensive Economic Partnership Agreement (CEPA). Negotiations for CEPA were launched in September 2021 and have been completed,” the Indian external affairs ministry said in a statement on Wednesday.
Arpita Mukherjee, professor at the Indian Council for Research on International Economic Relations (ICRIER), said “the rules of origin and percentage of value addition would be the crucial thing to watch out for in the deal”.
“While the tariff reductions would benefit several export sectors from India, we have to be cautious with the reciprocal opening to prevent dumping by a third country.”
Trade analyst Biswajit Dhar of the JNU also sounded a caveat on the rules of origin and value addition in the deal. Exports from India that could benefit include textiles, gems & jewellery, petroleum products, engineering and machinery products and chemicals.
Gains will be limited as the import duties on most goods are at 5 per cent in the UAE.
Import duties on most agricultural products, such as meat, fruits & vegetables and tea are already at zero per cent in the Gulf nation. The UAE has also drawn up a long list of products, including food items such as dates and confectionery for duty concession.
“The FTA will provide impetus and much needed push to exports of gem and jewellery products to the Emirates as G & J exports to UAE declined significantly to $1.18 billion in 2020-2021 due to the Covid-19 pandemic situation,” Colin Shah, chairman, Gem and Jewellery Export Promotion Council (GJEPC), said.
“With proposed nil duty, we are confident that exports of plain gold jewellery and gold studded jewellery from India to the UAE would go up to $10 billion in 2023,” Shah said.
