India on Sunday sent the first consignment of jewellery to the UAE under the bilateral comprehensive free trade agreement (FTA) that came into force on 1 May. The consignment flagged off by commerce secretary BVR Subrahmanyam from New Delhi will now benefit from zero duty access to the UAE market.
The Comprehensive Economic Partnership Agreement (CEPA) will initially give zero duty access to 90% of Indian products and 65% of products from UAE. Over 10 years, 97% of Indian products will get zero-duty access to the UAE market and 90% of UAE products would have duty free access to the Indian market.
India has extended a 1% duty concession for gold imports from the UAE for up to 200 tonnes of inbound shipments under the comprehensive free trade pact signed on February 18.
“The gems and jewellery sector contributes a substantial portion of India’s exports to the UAE and is a sector that is expected to benefit significantly from the tariff concessions obtained for Indian products under the India-UAE CEPA,” the ministry of commerce said on Sunday.
Other items that will benefit from preferential market access to the UAE include textiles, leather, footwear, sports goods, plastics, furniture, agricultural and wood products, engineering products, pharmaceuticals, medical devices, and automobiles. In case of services, Indian service providers will have enhanced access to around 111 sub-sectors from the 11 broad service sectors under the pact.
Subrahmanyam urged exporters to take advantage of free trade agreements and said that the UAE would be a gateway to the world for Indian exports. The government is working on reducing the logistics cost so that products from India’s hinterland could compete in the global market, he said.
CEPA, which was negotiated in a record 88 days, is expected to increase the total value of bilateral trade in goods to more than $100 billion and trade in services to more than $ 15 billion within five years.
“Given the size of India’s market and the access that UAE would give to India, much more could be achieved,” Subrahmanyam said.
India last month signed an interim trade agreement with Australia and is in negotiations with the UK, Canada, and the EU for similar agreements.
The Central Board of Indirect Taxes and Customs and the Directorate General of Foreign Trade on Sunday issued notifications for the operationalisation of the agreement.
It is the first major free trade pact signed by the government led by Prime Minister Narendra Modi since it came to power in 2014 and is likely to benefit Indian products worth $26 billion that are subjected to 5% import duty by the UAE.
India has also offered significant tariff concessions on dates, petroleum products, petrochemicals, metals, and minerals to the UAE under the pact.
The agreement mandates up to 40% value addition on most goods and wholly-obtained criteria for agri products, to prevent misuse of the CEPA. This aims to prevent re-export of goods imported from other countries taking advantage of lower tariffs without value addition.
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