India and the United Arab Emirates (UAE) have formally launched negotiations on a Comprehensive Economic Partnership Agreement (CEPA) that aims at expanding bilateral trade and investment between the two nations.
The first round of CEPA negotiations will be held on Thursday and Friday. Both nations aim to sign a deal in six months.
A new strategic economic agreement between both nations is expected to increase bilateral trade in goods to $100 billion within five years of the agreement being signed and increase trade in services to $15 billion.
"Both sides will aim to conclude negotiations by December 2021 and sign a formal agreement in March 2022 after the completion of internal legal procedures and ratification," commerce and industry minister Piyush Goyal said after a meeting with Thani bin Ahmed Al Zeyoudi, UAE's minister of state for foreign trade in the national capital.
A trade deal, if worked out between both nations, will be the first of the bunch of trade agreements that India aims to ink with other developed nations over the next few months. The UAE is currently India’s third-largest trading partner with bilateral trade and the second-largest export destination after the US.
On UAE's part, India was its second-largest trading partner in 2019.
UAE is also the eighth-largest investor in India, having invested $11 billion between April 2000 and March 2021, while investment by Indian companies in the UAE is estimated to be over $85 billion.
Goyal said that both nations decided that discussions should focus on items that would have an early impact on trade. "We decided that items in which we have a clear competitive and comparative advantage for trade between the two nations on both sides in goods and services, will focus on getting items of immediate importance to be agreed upon," he said.
For India items of interest will be textiles, jewellery, footwear, leather products and handicrafts. On UAE's side, there will be focus areas such as fintech, food, medical equipment, petrochemical equipment and byproducts, among others, Thani said.
India's major exports to the UAE include petroleum products, precious metals, stones, gems and jewellery, minerals, food items such as cereals, sugar, fruits and vegetables, tea, meat, and seafood, textiles, engineering and machinery products, and chemicals. India's top imports from the UAE include petroleum and petroleum products, precious metals, stones, gems and jewellery, minerals, chemicals and wood and wood products. India imported USD 10.9 billion of crude oil from the UAE in 2019-2020.
Both ministers emphasized that concluding CEPA negotiations quickly and constructively will further strengthen the deep trade and economic ties between both countries.
"Reaffirming their commitment to working together, both Ministers agreed to strengthen the rules-based, transparent, non-discriminatory, open, and inclusive multilateral trading system embodied by the World Trade Organization. They also agreed to work towards a balanced and inclusive outcome at the 12th WTO Ministerial Conference (MC12) in Geneva, Switzerland," an official statement said.
"Both Ministers emphasized that CEPA will create new jobs, raise living standards, and provide wider social and economic opportunities in both nations," the statement said.
Goyal said he will co-chair the ninth UAE-India high level joint task force on investments with Sheikh Hamed bin Zayed Al Nahyan, Member of the Abu Dhabi Executive Council.
On the investment front, Thani said UAE's regulations have been designed to welcome enterprise and innovation, including 100 per cent foreign ownership laws, efficient business set-up procedures, and long-term visas for investors, key professionals and high-achieving students. "It (CEPA) lays the foundations for an ambitious new era, one in which we are able to attract investment and talent to the region, accelerate growth and spur a broad-based economic recovery," Thani said.