India is close to signing the FTA with UAE, India’s third-largest export destination. The treaty would make sure it is mutually beneficial.
Until FY20 UAE, was the second-largest export destination of India, with the first place going to the USA. But in FY21 China, occupied second place, relegating UAE’s position to the third. A change caused by the pandemic.
India has zeroed in up to 1000 items in the duty concession list for the FTA. The list covers various products across various sectors like textiles, garments, gem, jewellery, leather, spices, engineering goods, chemicals and poultry.
Between December 6 and 10, India and UAE held the third round of FTA negotiations. They have laid down broad outlines of the deal and have begun adding final touches to it. When India signs this FTA, it would be the first in a decade.
UAE imposes 5% duty on garments, textiles and jewellery, and 10% duty on certain steel products. The importance of this FTA lies in the fact that these three segments alone consist of 34% of India’s export at last fiscal.
During the FY20, the export share was 43%.
India is also concerned with the UAE’s ban on poultry import from India under the light of bird flu.
As a persuasion to lift the ban, India has declared that such poultry products are procured by following the rules laid down by the World Organisation for Animal Health.
This is not the first time the Arab nation has imposed a ban on Indian food products under the light of a disease. In 2018, UAE enforced a similar ban on fruits and vegetables from Kerala state following the Nipah virus outbreak.
From the UAE, they have also submitted a long-list for duty concession consisting of food products like dates and confectionery.
Both sides have been discussing this FTA since September 23. They named this agreement the Comprehensive Economic Partnership Agreement. They are aiming to wrap the discussion by December and sign it by March 2022.
According to reports, the CEPA will be declared by Prime Minister Modi in January when he visits the UAE. The deal is expected to double the bilateral merchandise trade to $100bn in five years and $15bn in service trade.
In the case of the service sector, both sides are trying for a deal that will allow free movement of skilled professionals between the nations. If it comes to force will boost employment opportunities and economic activities.
If this is a success, it will be a stepping stone for India in its plan to create free, balanced and fair-trade alliances with many economies. And also to rejuvenate existing trade agreements.
Presently India is in FTA talks with Israel, the US, the UK, Australia and the EU.
These FTAs will help achieve sustained growth rates in exports and hit the target of $400bn merchandise exports in FY22.
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