INDIA AND UAE RELATION, BILATERAL TRADE
Current News:-
Trade Settlement In Local Currencies
India and the United Arab Emirates have agreed to start trade settlement in local currencies.
In this regard, an MoU between RBI and UAE Central Bank for the establishment of a framework to promote the use of local currencies (INR - AED) for cross-border transactions was signed.
The MoU aims to put in place a Local Currency Settlement System (LCSS) to promote the use of INR and AED bilaterally.
Creation of the LCSS would enable exporters and importers to invoice and pay in their respective domestic currencies.
This in turn would enable the development of an INR-AED foreign exchange market.
The use of local currencies would optimise transaction costs and settlement time for transactions, including for remittances from Indians residing in UAE.
Linking of Fast Payment Systems of both the countries
India and the UAE agreed to link the Indian Unified Payments Interface with the Gulf country's Instant Payment Platform (IPP).
In this regard, RBI and the Central Bank of the UAE signed MoU for cooperation for interlinking their payment and messaging systems.
IIT Delhi to open campus in Abu Dhabi India signs MoU with Education and Knowledge dept of Abu Dhabi for setting up IIT Delhi campus there.
India’s full support for UAE’s COP-28 presidency, PM Modi assured India’s full support for UAE’s COP-28 presidency.
The 2023 United Nations Climate Change Conference or Conference of the Parties of the UNFCCC, more commonly referred to as COP28, will be held from November 30 until December 12 at the Expo City, Dubai
India – UAE Bilateral Relationship
India and the UAE established diplomatic relations in 1972. Since then, their relationship has grown manifold.
In January 2017, India and UAE signed a Comprehensive Strategic Partnership Agreement.
The strong bilateral relations have received impetus from time-to-time with exchange of high-level visits from both sides.
In February 2019, UAE invited India as the "Guest of Honour” to address the Inaugural Plenary of 46th Session of the Organisation of Islamic Cooperation.
PM Modi paid his third visit to the UAE in August 2019. He was awarded the highest civilian award of UAE called 'Order of Zayed'.
Crown Prince of UAE visited India for the second time in January 2017 as the Chief Guest at India’s Republic Day celebrations.
The foundation stone laying ceremony for the first traditional Hindu Temple in Abu Dhabi was held in April 2019.
In February 2022, PM Modi and Crown Prince of Abu Dhabi HH Sheikh Mohammed bin Zayed Al Nahyan held a Virtual Summit.
Both the leaders issued a Joint Vision Statement – “Advancing the India and UAE Comprehensive Strategic Partnership: New Frontiers, New Milestone”.
UAE is the guest country at G-20, being held under India’s presidency.
Trade Relation Between India and UAE
India-UAE trade rose to USD 85 billion in 2022, making the UAE India’s third-largest trading partner for 2022-23 and India’s second-largest export destination.
India is the UAE’s Second Largest Trading Partner.
Both the countries are expecting to achieve the target of USD 100 billion in trade before the G-20 meeting in Delhi in September 2023.
Comprehensive Economic Partnership Agreement (CEPA) Between India and UAE
India-UAE CEPA was signed on 18 February 2022 in New Delhi during the India-UAE Virtual Summit.
In March 2022, India announced the unveiling of the CEPA with the UAE.
It covers almost all the tariff lines dealt in by India (11,908 tariff lines) and the UAE (7581 tariff lines) respectively.
Investment between India and UAE
Since the signing of CEPA, UAE has emerged as the fourth largest investor in India during 2022-23. It was seventh largest investor in 2021-22.
In the last fiscal, FDI from the UAE to India jumped over three-fold to $3.35 billion from $1.03 billion in 2021-22.
NRI Remittances from UAE to India
The annual remittances made by the large Indian community in UAE (estimated to be around 3.3 million) amount to US$ 17.56 billion for year 2018.
One Year of India- UAE CEPA
Context:- Recently, the India-UAE Comprehensive Economic Partnership Agreement (CEPA) completed one year of implementation.
What is CEPA?
It is a kind of free trade pact that covers negotiation on the trade in services and investment, and other areas of economic partnership.
It may even consider negotiation in areas such as trade facilitation and customs cooperation, competition, and IPR.
Partnership agreements or cooperation agreements are more comprehensive than Free Trade Agreements.
India-UAE CEPA
About
The India-UAE CEPA is a landmark free trade agreement (FTA) between the two countries. It covers trade in goods, services, investment, and other areas of economic cooperation.
The CEPA entered into force on May 1, 2022 and is expected to increase the total value of bilateral trade in goods to over USD 100 billion and trade in services to over USD 15 billion within five years.
The CEPA is the first deep and full-fledged FTA signed by India with any country in the past decade.
Impact of India-UAE CEPA on Trade Ties
Bilateral Trade
Bilateral trade between India and the UAE reached historic highs during FY 2022-23; increased from USD 72.9 billion (FY 22) to USD 84.5 billion (FY 23), registering an increase of 16%.
India-UAE Trade Relations
Trade
UAE is India's 3rd largest trading partner (after US, China). Bilateral trade turnover between the two was US$ 68.4 billion in 2021.
FDI
UAE is the 7th largest investor in India with cumulative FDI inflows of US$ 15,179 million from April 2000 – September 2022.
Imports
Major Indian imports from UAE are crude oil, gold, pearls and precious stones, metal ores and metal scrap, chemicals, electrical machinery, etc.
Indian Exports to the UAE
Indian exports to the UAE increased from USD 28 bn to USD 31.3 bn (same period as above); an 11.8% year-on-year growth in percentage terms.
During the same period, growth in India’s global exports was 5.3%, excluding the UAE, India’s global exports grew at 4.8%.
Sectors That Witnessed Significant Export Growth
- Mineral Fuels
- Electrical Machinery (particularly telephone equipment)
- Gems & Jewellery
- Automobiles (Transport vehicles segment)
- Essential Oils/Perfumes/Cosmetics (Beauty/Skin care products)
- Other Machinery
- Cereals (Rice)
- Coffee/Tea/Spices
- Chemical Products
Exports
Major Indian exports to UAE are petroleum products, gems and jewellery, machinery and instruments, chemicals, iron and steel, textiles and garments, cereals, meat and meat products, etc.
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