According to a report by Deloitte, the economies of India and the UAE can significantly benefit from their FTA by sharing knowledge and best practices in various areas of mutual interest, such as education, energy, skills and defence. Both countries have implemented the Comprehensive Economic Partnership Agreement (CEPA) from 1 May this year to boost bilateral trade and investment. It aims to boost trade to $100 billion in the coming years.
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“Under the preferential trade agreement, the two economies can benefit from sharing knowledge and best practices in various areas of mutual interest,” the report said. It said the Indian economy relies heavily on crude oil imports to meet its domestic needs and that current geopolitical tensions between Russia and Ukraine and dwindling supplies from Iran are further affecting macroeconomic fundamentals. “These turbulences suggest India should work to reduce its energy dependency by exploring alternative fuels and diversifying its crude oil suppliers to ensure undisturbed supplies,” it said.
The report noted that under the India-UAE Energy Partnership, the UAE has committed to meet India’s energy needs at competitive rates. It has pledged to help India’s economy build strategic petroleum reserves; development of the upstream and downstream petroleum sectors; and providing training and initiatives for human resource development in the energy sector. “This will help India become self-sufficient in energy,” the report said. The agreement will also increase employment for the Indian workforce in the Gulf region and contribute to India’s remittance revenues.
It further said the agreement plans to harmonize digital commerce and e-commerce between the two countries. The collaboration could be extended to emerging areas such as fintech lending and embedded finance. On food security, it said the UAE plans to invest $2 billion in building food parks in India to maximize crop yields and in turn ensure food security. It added that the opportunities for the UAE to invest in India are high, where seven mega-parks for the pharmaceutical and medical devices sector have been announced in 2020. Industry opportunities for India in the UAE come in oil and gas, textiles, healthcare, pharmaceuticals, real estate, construction and gems and jewelry segments. “Tariff concessions offered to the UAE in gold will reduce input costs and boost exports to the UAE. Besides, India has competence in jewelry making and design; the two countries can benefit from sharing their expertise and adding value in gemstones and jewelry,” it added. Likewise, there are sectoral opportunities for the UAE companies in India in the chemical, logistics and infrastructure sectors.
Jehil Thakkar, Partner, UAE Corridor Leader, Deloitte India, said the success of the treaty depends on its effective implementation in both countries. This free trade agreement, he said, will give Indian companies the opportunity to enter a major global market and scale up quickly. “The ease of doing business in the UAE and a seat in the Gulf Cooperation Council (GCC) makes it an attractive proposition for Indian companies, especially start-ups. The Emirates’ keen interest in nurturing Indian start-ups, by providing them with an ecosystem and financial support, could be a boon for these innovation-driven, disruptive companies,” said Thakkar. The CEPA offers Indian start-ups the opportunity to access additional GCC countries (Bahrain, Kuwait, Oman, Qatar and Saudi Arabia), he added. “The CEPA will support the growth ambitions of the UAE to become a trade, talent and business center of the world… It will also enhance cross-border cultural and people-to-people exchanges,” he added.
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