Indian industrialists this week said they hoped for a “free flow” of trade between India and the UAE, after the two countries signed a landmark deal that will take annual bilateral trade volume to $100 billion over the next five years.
The Comprehensive Economic Partnership Agreement was signed by Indian Commerce Minister Piyush Goyal and UAE Minister of Economy Abdulla bin Touq Al-Marri in New Delhi on Friday. The agreement, which would reduce tariffs on almost 80 percent of all goods and provide zero-duty access to 90 percent of Indian exports, will take effect in the next 60 days.
The UAE is India’s third-largest trading partner after the US and China, with a bilateral trade volume of $43.3 billion in 2020-21. It is also home to more than 3 million Indian expats, who send billions of dollars in remittances each year.
The new agreement is expected to benefit Indian exports in several sectors, including gems and jewelry, textiles, leather, footwear, sports and engineering goods, and pharmaceuticals.
“This is the first free trade agreement that India is signing with a foreign country after a long time and this will pave the way for the free flow of trade and investment,” the Federation of Indian Chambers of Commerce and Industry said in a statement.
“With tariffs removed and investment eased, that means a good amount of money coming into the Indian system. Also, Indian companies will invest in the UAE to use it as a base for the [Gulf Cooperation Council] and get access to Africa, where otherwise it is difficult for Indians to do business because of financial issues and banking constraints.”