The United Arab Emirates (UAE) and India are deepening their economic collaboration by extending their Comprehensive Economic Partnership Agreement (CEPA) to encompass eight new sectors. This strategic move aims to diversify and elevate annual bilateral trade beyond the $100 billion mark.
Key Sectors for Expansion:
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Artificial Intelligence (AI): Leveraging advancements in AI to drive innovation across industries.
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Financial Services: Enhancing cooperation in banking, insurance, and investment sectors.
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Digital Technologies: Promoting growth in cybersecurity, blockchain, and digital infrastructure.
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Logistics: Improving supply chain efficiency and connectivity between the two nations.
These sectors are targeted to diversify trade beyond traditional commodities like gemstones, jewelry, and oil, reflecting a shared vision for a more robust and multifaceted economic partnership.
CEPA: A Catalyst for Growth
Originally signed in 2022, the CEPA has already surpassed its initial five-year target of $100 billion in bilateral trade, achieving this milestone ahead of schedule. The agreement has facilitated the removal of tariffs on 80% of goods, with plans to eliminate all tariffs within a decade.
Innovative Initiatives and Local Currency Transactions
Initiatives like Dubai’s Bharat Mart, a showroom and warehousing project, aim to showcase thousands of Indian traders, exporters, and manufacturers seeking to tap into regional markets. Additionally, the UAE and India have agreed to conduct transactions in local currencies, allowing trade to be settled directly in dirhams and rupees. This development is particularly beneficial for businesses in the logistics and SME sectors, reducing reliance on the US dollar and streamlining trade processes.
Addressing Trade Imbalances
While the CEPA has been instrumental in boosting trade, there have been concerns regarding a surge in precious metals and diamond imports. India is reviewing the agreement to ensure that potential loopholes and tariff concessions do not adversely affect domestic industries. Both nations are committed to addressing these issues, with ongoing reviews to fine-tune the agreement for mutual benefit.
Future Prospects
The UAE and India are poised to explore additional sectors for collaboration, including education. The establishment of the first international campus of the Indian Institute of Technology (IIT) Delhi in Abu Dhabi exemplifies the potential for educational partnerships. Such initiatives are expected to further strengthen bilateral ties and contribute to the economic growth of both nations.
This deepening economic partnership underscores the UAE and India's commitment to fostering innovation, enhancing trade diversification, and building a sustainable economic future together.