India and the United Arab Emirates (UAE) last week signed a Comprehensive Economic Partnership Agreement (CEPA) aimed at boosting the merchandise trade between the two countries to $100 billion over next five years. The deal was signed during the virtual summit meeting between Prime Minister Narendra Modi and Crown Prince of Abu Dhabi Sheikh Mohamed bin Zayed Al Nahyan. This pact can herald a new age in India-UAE trade relations.

According to latest figures, trade between the two countries stood at $43.3 billion in 2020-21, with India’s exports amounting to $16.7 billion and imports standing at $26.7 billion, and the day after the signing of the agreement, Union Commerce Minister Piyush Goyal said that the ‘balanced, fair, comprehensive & equitable partnership agreement’ would be extremely beneficial for MSMEs, start-ups, farmers, traders and all sections of businesses. Sounds encouraging.

Also, the official statement adds that under the historic trade pact - that has been finalized in a record time of just 88 days and would come into force in less than 90 days - around 90% of products exported from India to UAE will attract zero duty, 80% lines of trade will attract zero duty, and remaining 20% is not going to affect India’s exports much. In addition, it will create a minimum of 10 lakh jobs for Indian citizens.

UAE is India’s third-largest trading partner and second-largest export destination, and the new trade pact signed between the two countries, in the backdrop of India’s pulling out of China-backed Regional Comprehensive Economic Partnership (RCEP), clearly signals that India is not averse to free trade agreements, and the CEPA will definitely serve to further deepen the partnership between the two countries which had signed a strategic partnership agreement in 2017.