India-UAE Comprehensive Trade Agreement

Context: Recently, India-UAE Comprehensive Economic Partnership Agreement (CEPA) entered into force between India and the United Arab Emirates (UAE) 

Relevance:  Prelims: Current Affairs of national and international importance
Mains: GS-2, Bilateral, regional and global groupings and agreements involving India and/or affecting India's interests

Introduction:

• India-UAE CEPA was signed on 18th February 2022, during the India-UAE Virtual Summit. The Agreement  entered into force on 1st May 2022
• CEPA provides an institutional mechanism to encourage and improve trade between the two countries
• The Agreement is a comprehensive agreement, which will cover:
• Trade-in Goods
• Rules of Origin
• Trade-in Services
• Technical Barriers to Trade (TBT)
• Sanitary and Phytosanitary (SPS) measures
• Dispute Settlement
• Movement of Natural Persons
• Telecom
• Customs Procedures
• Pharmaceutical products
• Government Procurement
• Intellectual Property Rights (IPR),
• Investment,
• Digital Trade
• Cooperation in other Areas

Benefits of India-UAE CEPA:

• Trade-in Goods:
• • India will benefit from preferential market access provided by the UAE, especially for all labor-intensive sectors.
  • Such as Gems and Jewellery, Textiles, leather, footwear, sports goods, plastics, furniture, agricultural and wood products, engineering products, medical devices, and Automobiles.
• Trade-in Services:
  • Both India and UAE have offered each other market access to the broad service sectors.
  • Such as ‘business services’, ‘communication services’, ‘construction and related engineering services, ‘distribution services’, ‘educational services’, ‘environmental services’, ‘financial services, ‘health-related and social services, ‘tourism and travel-related services, ‘recreational cultural and sporting services and transport services.
• Trade-in Pharmaceuticals:
  • Both sides have also agreed to a separate Annex on Pharmaceuticals to facilitate access to Indian pharmaceuticals products, especially automatic registration and marketing authorization in 90 days for products meeting specified criteria.

Background of India-UAE relations:

•  India and the UAE enjoy excellent bilateral relations, which are deep-rooted and historical, sustained and nurtured by close cultural and civilizational affinities, frequent high-level political interactions, and vibrant people-to-people linkages.
• India and the United Arab Emirates (UAE) established diplomatic relations in 1972. While the UAE opened its Embassy in India in 1972, Indian Embassy in UAE was opened in 1973.
• The traditionally strong bilateral relations enjoyed by India & UAE have received an impetus with regular exchange of high-level bilateral visits from time to time.
• The visit of India's Prime Minister (PM) to the UAE in August 2015 marked the beginning of a new partnership between the two countries.
• His Highness Sheikh Mohamed bin Zayed Al Nahyan, (MBZ) Crown Prince of Abu Dhabi and Deputy Supreme Commander of UAE Armed Forces, visited India from 10-12 February 2016
•  MBZ visited India for the second time from 24-26 January 2017 as the Chief Guest at India’s Republic Day celebrations
•  It was during this visit that the bilateral relations were upgraded to “Comprehensive Strategic Partnership”
• The latest visit by the PM to the UAE was in August 2019 during which he received the UAE’s highest award, 'The Order of Zayed’ conferred upon him by the UAE President.
• The visit also witnessed the official launch of the ‘RuPay Card’ in UAE and the release of a set of stamps commemorating the 150th Birth Anniversary of Mahatma Gandhi.
• The momentum generated by visits at the highest level was sustained by back-to-back reciprocal visits at the level of Foreign Ministers too.

Different dimensions of the India- UAE relations :

• Economic & Commercial:
• India and UAE have shared trade links through the centuries
• The trade was dominated by traditional items such as dates, pearls, and fish underwent a sharp change after the discovery of oil in the UAE (oil exports began from Abu Dhabi in 1962). 
• With the emergence of the UAE as a unified entity in 1971, exports from India started growing gradually over the years.
• The real impetus, however, started after Dubai positioned itself as a regional trading hub in the early 1990s, and at about the same time, the economic liberalization process started in India.
• Growing India-UAE economic and commercial relations contribute to the stability and strength of a rapidly diversifying and deepening bilateral relationship between the two countries.
• India-UAE trade, today is the US $ 59 billion making UAE, India's third largest trading partner for the year 2019-20 after China and US
• Moreover, UAE is the third largest export destination of India (after the US and China) 
•  UAE is the 9th biggest investor in India in terms of FDI.
•  UAE has committed to invest the US $ 75 billion in India’s infrastructure sector over a period of time. 
• India’s exports to the UAE are well diversified with a large basket. India’s major export items to the UAE are:
  • Petroleum Products,
  • Precious Metals,
  • Stones, Gems & Jewellery,
  • Minerals
  • Food Items (Cereals, Sugar, Fruits &Vegetables, Tea, Meat, and Seafood),
  • Textiles (Garments, Apparel, Synthetic fiber, Cotton, Yarn) 
  • Engineering & Machinery Products 
  • Chemicals
• India's major import items from the UAE are: 
  • Petroleum and Petroleum Products,
  • Crude oil
  • Precious Metals,
  • Stones,
  • Gems & Jewellery,
  • Minerals
  • Chemicals,
  • Wood & Wood Products.
• Air connectivity: At present, there is an air-bubble agreement between India and the UAE under which the airlines from India and UAE such as Air India/Air India Express, Spicejet, Indigo, Go Air, Vistara, Emirates, Etihad, Flydubai, and Air Arabia, etc. operate as per the agreement.
• NRI Remittances: The annual remittances made by the large Indian community in UAE amount to over US $ 17.06 billion in 2019 [2017 –  US $ 15.78 billion; 2018 – US $ 17.57 billion; 2020 (Jan-Sep) – US $ 11.20 billion
• Cultural Relations:
  • India-UAE Agreement for Cultural Cooperation, signed on 3 January 1975, is the basis for bilateral cultural cooperation
  • UAE has over 3.4 million Indians and Emiratis are quite familiar and receptive to the Indian culture.
  • The Indian cinema, TV, and radio channels are easily available and have a good viewership
  • Major theaters and cinema halls in the UAE screen commercial Hindi, Malayalam, Telugu, and Tamil films
  • The Emirati community also part take in our annual International Day of Yoga events and various schools of yoga & meditation are running successfully in the UAE
  • The foundation stone for the first Hindu temple in Abu Dhabi was laid on 20 April 2019
  • The Louvre Museum in Abu Dhabi, the only branch of the Louvre Museum outside Paris has a number of artifacts from India as well, including Mughalpainting ‘The Huntress’ painted in one of the Mughal courts in South India
  • In August 2021, a historic Agreement was signed between the NewYork University Abu Dhabi (NYUAD) and the Indian Council for Cultural Relations (ICCR) New Delhi to establish a Visiting Professorship in social science at New York University Abu Dhabi (NYUAD)
  •  The agreement aims to promote broader engagement in academics between the two countries.
• Education:
  • There are 108 International Indian schools in the UAE following the CBSE and Kerala Board curricula with approx 2,15,000 students
  • Apart from the CBSE and Kerala Board examinations, the respective Education Wings coordinate the conduct of examinations for Indira Gandhi National Open University, National Institute of Open Studies, and Institute of Chartered Accountants of India.
  • The Embassy and the Consulate also issue Genuineness Certificates after obtaining verification from the concerned University or Technical board in India to expatriate Indians to facilitate grant of Equivalency Certificate for their Indian educational degrees or certificates by the UAE Ministry of Education
• Defense Cooperation:
• Defense cooperation between India and UAE is steered through a Joint Defence Co-operation Committee (JDCC) at the Ministry level
• Both countries have frequent exchanges between defense establishments
• The prestigious International Defence Exhibition and Conference (IDEX) and the Naval Defence and Maritime Security Exhibition (NAVDEX) held in February 2021 in Abu Dhabi were attended by the Indian Defence Industry participated through an India Pavilion. 
• Indian Defence delegation also joined the Dubai Air Show in November 2021.
• Indian Air Force (IAF) for the first time joined personnel from UAE, Saudi Arabia, France, UK, US, Republic of Korea, and Bahrain, in the multinational exercise Desert Flag-06 in March 2021
• Indian Community:
  • Indian expatriate community of approximately 3.4 million is the largest ethnic community in UAE constituting roughly about 35 percent of the country’s population. 
  •  15% of the diaspora is in the Emirate of Abu Dhabi and the rest in 6 Northern Emirates including Dubai
  • Today, around 35% of the Indian community is made up of professionally qualified personnel, businessmen & other white-collar non-professionals
  •  10% of the total Indians constitute dependent family members.
  • The Indian community has played a major role in the economic development of the UAE and is respected for its technical competence, sense of discipline & law-abiding nature.
  • There are various linguistic or regional associations for social and cultural activities.
  • During the Covid pandemic, the associations played a stellar role in relief and repatriation operations

Challenges: The basic challenges faced in  India-UAE relations have been indicated below:

• Commercial Challenges:
• • Indian companies based in the UAE face challenges due to unclear commercial regulations, labor laws, and a lack of transparency by Emirati businesses.
• Iran Issue:
• • The UAE and Iran have territorial disputes over the Tunbs and Abu Musa islands. Iran is aggressive in its interactions. It will be another Iranian-Arab feud. India’s energy security, trade, and diaspora ties will be harmed if there is a regional conflict.
• Problems faced by Diaspora:
• • A large number of untalented and unskilled Indian laborers or migrants working in the United Arab Emirates are subjected to terrible working conditions and are denied the protections afforded to other workers.

Conclusion:

•   Despite the challenges, the India-UAE CEPA will further cement the already deep, close, and strategic relations between the two countries and will create new employment opportunities, raise living standards, and improve the general welfare of the people of the two countries.