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Current Affairs

India-UAE comprehensive trade agreement

Date: 22 February 2022 Tags: Miscellaneous

Issue

A bilateral comprehensive trade agreement has been signed by India and the United Arab Emirates (UAE).

 

Background

This is the biggest trade pact of the last seven years and would open new routes for regional trade and connectivity.

 

Details

  • The FTA is expected to reduce tariffs for 80 per cent of goods and give zero duty access to 90 per cent of India’s exports to the UAE.

  • The trade pact will start a new age in bilateral financial relations. It is expected to increase from $60 billion to $100 billion in the next five years.

 

Benefitting sectors

  • Its rules extend to goods, services, rules of origin, government procurement, Customs procedures, intellectual property rights, and e-commerce.

  • Labour-intensive sectors such as gems and jewellery, textiles, leather, footwear, sports goods, engineering goods, and pharmaceuticals are likely to be benefitted, especially job creation.

  • Electronic goods, chemicals and petrochemicals cement, ceramics and machinery which account for 9% of total value of Indian exports could be duty free within next 5-10 years.

 

Advantages

Import of low-priced raw materials from the UAE will help support domestic industries and reduce cost of products.

 

Deals signed

Memorandum of Understanding (MoU) was signed between the International Financial Services Centers Authority (IFSCA), GIFT City and the Abu Dhabi Global Market Financial Services Regulatory Authority (FSRA).

 

Safeguard mechanism

Robust rules of origin have been framed to protect both economies from misuse of the agreement by third countries.

 

Future prospects

Deepening relationship with UAE is expected to help Indian exporters to gain access to West Asian countries, Africa and some parts of Europe.