Published : March 15, 2022, Updated : March 21, 2024

CEPA and What it Means for Exporters in India

CEPA and What it Means for Exporters in India

February 18, 2022, will go down in history as a watershed moment in the history of India’s global trade. India inked its first free trade agreement in almost over a decade by signing the Comprehensive Economic Partnership Agreement or CEPA with the United Arab Emirates. 

Manufacturing businesses that make in India have waited with bated breath for long. Especially, it concludes the wait for Indian manufacturers with ambitions to expand into the UAE. 

What are those industry-specific sectors that will get a market outreach boost? What are the safeguards that have been built into the free trade agreement to protect India’s domestic manufacturing interests? We walk you through answers to these questions and many more details on the trade deal between India and the UAE here. Read on. 

CEPA: Overview and Broad Contours of the Free Trade Agreement 

Hailed as a landmark chapter in the bilateral trade history between the two countries, CEPA is expected to unlock new avenues of opportunities for several Indian exporters. 

CEPA between India and the UAE is a free trade agreement that is expected to grow the value of bilateral trade between the two countries from USD 60 billion now to USD 100 billion over the next five years. 

The UAE is offering an overall duty elimination for 97% of its tariff lines and 99% of India’s exports in value terms. Under the auspices of the free trade agreement, the emirate of Abu Dhabi will be offering duty-free access to 90% of Indian exports. 

Moreover, there will be zero-duty on an additional 9% of trade value on goods, such as electronics, chemicals, petrochemicals, ceramics, machinery, likely in the next five to ten years from now. 

Industry-Vertical Specific Opportunities for Indian Exporters Under CEPA

The bilateral trade deal between India and the UAE covers a long list of sub-sectors in Indian manufacturing. Manufacturers in these sub-sectors and industries can now avail of export opportunities in the UAE: 

Textiles and Garments: Textile and garment exporters can look forward to additional export opportunities worth USD 2 billion under CEPA. Of these additional export opportunities, man-made textile exports will account for opportunities worth USD 650 million. 

Engineering Goods: Engineering goods exporters can grow their export value by up to USD 92. billion through this free trade deal with the UAE. The additional scope will grow “made in India” engineering goods exports to the UAE by 2X. 

Agriculture: The deal is expected to add USD 850 million to India’s agricultural exports to the UAE. 

Plastics: The additional export opportunities for Indian plastics exporters through CEPA are valued at USD 1.3 billion. 

Pharma: Pharmaceutical exporters in India have a major win from the deal. Medicines made in India that already have a regulatory clearance from either the United States, the United Kingdom, or the European Union will get regulatory clearance for export to the UAE within 90 days of application. The additional pharmaceutical export opportunities are estimated at USD 1 billion. It represents a 28% growth from the existing export value. 

Leather and Footwear: Leather and footwear exports from India to the UAE are expected to grow by USD 130 million. 

Beyond the industry-verticals stated above, the other sectors that CEPA covers are greentech, fintech, automation, artificial intelligence, e-commerce, digital, and startups. These other sectors together will add another USD 18 billion to bilateral trade between India and the UAE by 2030. 

Safeguards Built into CEPA to Protect India’s Manufacturing Interests

CEPA has built-in safeguards to protect the domestic manufacturing interests of both Indian and the UAE. Safeguards to protect the interests of Indian manufacturers and exporters are as follows.

Country of Origin: Exports routed to the UAE through CEPA will require a “country of origin” certification to ensure that goods made in India get their due. 

PLI Sectors: Industry-verticals covered under the Productivity Linked Incentive scheme by the Government of India have been placed under a negative list in CEPA. 

Negative List: The negative list in CEPA covers the sub-sectors of dairy, fruits, vegetables, cereals, tea, coffee, sugar, food preparation, tobacco, petroleum waxes, coke, dyes, soaps, natural rubber, tires, footwear, processed marbles, toys, scrap of aluminum and copper, medical devices, TV pictures, auto, and auto components.

Digital Trade: A Step Towards Greater Tech Integration in EXIM Supply Chain

CEPA makes a major push for digital trade. The trade deal between India and the UAE will make use of greater technology integration from both sides for the harmonization of regulatory standards and data governance. The use of a digital platform for data governance will ease approvals and bring speed to the processing of export financing solutions to Indian manufacturers and boost their working capital efficiency. 

Credlix Export Finance Solutions for Indian Exporters with Interests in the UAE

Credlix is the digital supply chain finance platform from Moglix for enterprises, suppliers, and exporters who make in India and South East Asia to get quick collateral-free working capital solutions and connect to the next opportunity in the global manufacturing supply chain. To learn how Indian exporters with interests in the UAE can realize their true growth potential with Credlix, click here

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