India, UAE CEPA encourages trade through tariff elimination, says UAE’s Economy Minister Marri

UAE’s economy minister Abdulla bin Touq Al Marri has said that the recently signed Comprehensive Economic Partnership Agreement (CEPA) between the 2 countries encourages “trade through tariff elimination.”

Speaking to our correspondent Sidhant Sibal, Minister Al Marri said, “key products that will immediately benefit from the Agreement include oil & gas, petrochemicals, minerals, textiles, agriculture, gold and jewellery, metals and more..”

India UAE trade pact came into force on the first of May and was signed in February. Gems & jewellery sector contributes a substantial portion of India’s exports to the UAE and is a sector that is expected to benefit significantly from the tariff concessions obtained for Indian products under the India-UAE CEPA.

The minister explained, “By finalising the CEPA, the UAE and India unleashed a new golden era in their bilateral relations, under the leadership of His Highness Sheikh Mohamed bin Zayed and Prime Minister Modi.” 

CEPA is expected to increase the total value of bilateral trade in goods to over US$100 billion and trade in services to over US$ 15 billion within five years. The minister also spoke about issues like diversifying the UAE economy, and trade pacts with other countries.

WION: You were in Delhi in May. What was your focus during this visit?

Abdulla bin Touq Al Marri: Yes, we went back to India along with a significant delegation from the UAE, both in terms of number and member profiles, to elaborate on the various aspects of the UAE-India Comprehensive Economic Partnership Agreement (CEPA), which has been drafted based on a flexible framework that also leaves room for future improvements, if needed. During the visit, we held several meetings with the Indian government and the private sector to highlight current trade and investment opportunities and enable small and medium-sized enterprises (SMEs) and start-ups in both countries to optimally leverage the incentives offered by this historic deal.

WION: How significant has the finalization of the trade pact been?

Abdulla bin Touq Al Marri: By finalizing the CEPA, the UAE and India unleashed a new golden era in their bilateral relations, under the leadership of His Highness Sheikh Mohamed bin Zayed and Prime Minister Modi. The timing of the signing of the agreement was also symbolic as the two countries celebrate 50 years of friendship.

The CEPA is setting a roadmap for a future partnership between our two countries, that will strengthen the current strategic relations and open new opportunities for greater depth and breadth of cooperation and intensify bilateral engagement in diverse areas. We concluded CEPA in a record 88 days, which reflects the strong desire of both countries’ leaderships to exploit opportunities and benefit the economies of our countries in many sectors.

The CEPA provisions cover multiple areas such as trade in goods, trade in services, customs procedures and trade facilitation, trade remedies, rules of origin, digital trade, economic cooperation, government procurement, intellectual property rights (IPR), and investment. And we expect to boost bilateral trade to USD 100 billion within the next five years.

WION: In terms of gold, how will Indian businesses benefit from the pact?

Abdulla bin Touq Al Marri: The CEPA will encourage trade through tariff elimination or reduction on more than 80 per cent of goods and it is expected to have a major impact on trading between India, the UAE and the wider region. Key products that will immediately benefit from the Agreement include oil & gas, petrochemicals, minerals, textiles, agriculture, gold and jewelry, metals and more. The CEPA creates for businesses and investors from both countries a predictable and transparent trading environment and result in more economic opportunities by:

• Eliminating or reducing customs duties;
•  Removing non-tariff barriers to trade;
• Strengthening the use of international standards;
• Granting preferential access to both markets;
• Establishing an effective and efficient dispute settlement system;
• Enabling access to government procurement.

WION: How can UAE be a hub for regional and global trade flows? And how can Indian goods get a wider space in West Asia via your country?

Abdulla bin Touq Al Marri: The world sees the UAE as a stable and attractive place to do business, but also as a reliable partner to trade with. Our logistics network extends to more than 400 global cities. Our infrastructure and connectivity to global markets by road, sea and air provide a gateway for Indian goods to reach millions of new people. 

• UAE exporters will benefit from improved productivity and efficiency gains as we unclog supply chains and create new networks for products.
• The CEPA presents a solid prospect for Indian companies to expand their outreach and expand their business by fostering great opportunities in the UAE and beyond.
• Following the COVID-19 outbreak, our government has set an ambitious goal to be the fastest recovering country from the impact of the pandemic.
• While international organisations expected the UAE’s economy to grow by 2.1% in 2021, we achieved a growth rate of 3.8%. It reflects several factors, including our ability to manage COVID-19 and easing of restrictions, and the rebound in oil prices.
• But one of the most prominent factors behind the growth upgrade was also the introduction of a series of reforms and stimulus measures to revive economic activity. we established or amended over 40 laws to enhance the business environment and boost competitiveness.
• We overhauled the law on commercial companies and removed the requirement for onshore companies to have an Emirati shareholder, allowing 100% free foreign ownership in all major economic sectors.
• We established new legislation on commercial registries and trademarks.
• We modernized residency rules to make it easier to attract and retain highly educated talent from all over the world.
•  We also adopted the New Penal Code to reflect the changing economic and social needs of residents and ensure our legal system is aligned with international best practices.
• All the reforms and initiatives I previously listed—and many more—are an open invitation for Indian investors and companies to be part of the UAE new growth plans.
• The GDP is now expected to increase by 5.4% and 4.2% in 2022 and 2023 according to the central bank of the UAE.

WION: After signing the trade pact with India, what other milestones are you looking at achieving?

Abdulla bin Touq Al Marri: Bilateral trade, investment and energy ties between India and the UAE have remained robust. The signing of the CEPA is a testament to these longstanding bilateral trade and investment links. Both sides are also strengthening their cooperation in new areas of renewable energy like green hydrogen, climate action, start-ups, skilling, fintech and health tech.

We are looking for new frontiers and new milestones that will ensure that the two countries work together even more closely to address the shared global challenges, achieve shared objectives and build a robust and resilient relationship that is future-ready. And I call upon the private sector in India and the UAE to leverage the benefits that CEPA represents.

WION: Are you looking at signing trade pacts with other countries? If yes, when do you plan on doing so?

Abdulla bin Touq Al Marri: Yes, we have signed two other agreements with Israel and Indonesia and great progress was made in negotiations to sign more agreements with other countries during the coming period. The UAE’s ambition is to expand our bilateral trade ties with like-minded nations to enhance our global competitiveness, increase foreign direct investment, continue to attract some of the world’s top human capital, and position the country as a global hub for business, investment and innovation.

Expanding our trade partnerships through a series of agreements will help consolidate our status as a global trade and logistics hub, open new markets for our exporters, secure supply chains, boost investment flows and spur greater economic growth for the region. As governments around the world strive to materialize the goal of a free, fair, inclusive, non- discriminatory, and transparent trade and investment environment and keep markets thriving, we are confident that our CEPAs with some of the largest economies in the world contribute to the achievement of this goal.

WION: How are you diversifying the UAE economy?

Abdulla bin Touq Al Marri: The development model of the UAE over the past decades has focused on diversification to ensure sustainability. While the UAE remains one of the major producers of oil, the oil sector share in the economy has been steadily decreasing. Today oil does not constitute more than one-third of our GDP.

The energy sector itself has changed significantly, by leveraging technology to become a leader in renewable and clean energy with global standing in solar power generation. Going a step beyond diversification, we are in fact building a new flexible, more open economic model in the UAE based on the pillars of creativity, innovation and entrepreneurship.

We are constantly enhancing the investor-friendliness and openness of our national economy in line with the UAE’s reputation as a thriving global trade and economic hub. In fact, the country recently updated many of its laws and introduced several forward- looking policy reforms, keeping pace with the economic realities and developmental priorities of our times.

Most important law amendments aimed at the business sector include the introduction of 100% foreign ownership and the decriminalization of cheques. Following this, we strengthened the anti-money laundering system and family businesses sector, and several other policies were defined to guarantee a more attractive and profitable business & investment environment in the country.

These include measures to cut the red tape, strengthen the IP system, enhance the ease of doing business, reduce the cost of doing business, open new markets & expand trade; offer more support to SMEs and FDI flows; create opportunities in new sectors and most importantly, attract talent. The introduction of a revamped residency and visa system added more value to these efforts. It now allows investors, businessmen, talented professionals, researchers and outstanding students to envision their long-term futures in the country and integrate better with our society and above all – be part of the UAE’s exciting growth journey.

I would also like to highlight the ‘Projects of the 50,’ in this regard, which were launched by the UAE to mark its milestone 50th founding anniversary with 50 grand projects. These initiatives are aimed at further diversification and strengthening our economy to establish the UAE as a global nation and the ultimate destination for innovators, inventors, and disruptors. The CEPA model is part of this project.

I would also like to highlight ‘Investopia,’ the global investment initiative launched by the UAE government in September 2021. We started Investopia’s global talks from India as a strategic step towards reaching out to other countries, with the aim of promoting and channeling investments in the economies of the future across emerging markets and developing countries.