Central Idea

• The India-UAE Comprehensive Economic Partnership Agreement (CEPA) signifies a deep, fraternal, and strategically important relationship between the two countries that goes beyond just economic cooperation. The success of the agreement in stimulating economic growth and providing investment opportunities has unlocked new possibilities for multi-sectoral collaboration and partnerships

Background: India-UAE relationship

• Historical ties: The India-UAE relationship has been shaped by centuries of cultural and economic engagement on the Indian Ocean’s network of exchange. The two countries share historical ties that go back to pre-modern times, with Arab traders having visited the west coast of India since the fourth century AD.
• India’s third-largest trading partner: The UAE emerged as India’s third-largest trading partner, highlighting the two countries’ positive outlook towards economic cooperation.
• Trade partnership strengthened with oil: The India-UAE partnership was forged first on the trade of traditional items, and then strengthened with oil. It found a formal dimension after the creation of the UAE Federation in 1971, and then accelerated in the 1990s when a liberalised India embraced the opportunity to export to the UAE and markets beyond.
• Relationship is today more than an economic partnership: It speaks to the Emirates’s deep, fraternal, and strategically important relationship with India, reinforcing the UAE’s position as a key partner in India’s foreign policy. The two countries share strong cultural and people-to-people ties, with a significant Indian diaspora in the UAE.
• key partner in India’s development agenda: The UAE has been a key partner in India’s development agenda, including investments in the oil and gas sector, renewable energy, and infrastructure. The UAE has also been supportive of India’s efforts in combating terrorism and enhancing security cooperation.

India- UAE Comprehensive Economic Partnership Agreement (CEPA)

• The India-UAE Comprehensive Economic Partnership Agreement (CEPA) is a bilateral trade agreement that aims to strengthen economic ties between the two countries.
• The CEPA covers a wide range of subjects, including trade in goods, trade in services, investment, intellectual property rights, and competition policy.
• The CEPA has been in the making for several years, with negotiations starting in 2017 and the agreement finally coming into force on May 1, 2022. The agreement builds on the decades of mutual enterprise between the two countries, with the UAE emerging as India’s third-largest trading partner.

How India- UAE CEPA benefits both the countries?

• Increased trade: The CEPA is expected to significantly increase trade volumes between India and the UAE, with the potential to create new investment opportunities and increase business partnerships. This will help both countries to diversify their trade relationships beyond their traditional trading partners.
• Diversified trade: The CEPA covers a wide range of subjects, including trade in goods, trade in services, investment, intellectual property rights, and competition policy, allowing for a more diversified trade relationship between the two countries.
• Access to new markets: The CEPA is inspiring innovators and investors, catalysing SMEs, startups, and India Inc to make decisive inroads into new markets, particularly the Emirati market, and from there to the Middle East, Africa, and Europe. This will benefit both countries in terms of access to new markets and opportunities.
• Support for entrepreneurship: The CEPA provides support for startups in both India and the UAE, enabling them to explore growth and diversification into each other’s markets, as well as other markets in the region and beyond. The India-UAE Startup Bridge will also enable them to attract investment from venture capitalists and angel investors.
• Addressing developmental challenges: The CEPA provides a trade lens to tackle issues such as energy and food security, agriculture, and sustainability, making it a strategic catalyst in addressing vital developmental challenges.

Facts for prelims: UPI in UAE

Way ahead?

• Looking ahead, the India-UAE CEPA presents a unique opportunity to further deepen economic and strategic ties between the two countries. Some of the key steps that can be taken to build on the success of the CEPA include:
• Strengthening infrastructure: India and the UAE can collaborate to strengthen infrastructure, including ports, airports, and logistics networks, to facilitate the movement of goods and people between the two countries.
• Enhancing cooperation in emerging sectors: The two countries can explore cooperation in emerging sectors such as renewable energy, artificial intelligence, and fintech, among others, to promote innovation and economic growth.
• Promoting investment: Both India and the UAE can take steps to promote investment in each other’s markets, including through the creation of investment promotion agencies, bilateral investment treaties, and other measures.
• Strengthening cultural ties: Cultural exchanges and people-to-people contacts can be further enhanced to deepen the historical and cultural ties between the two countries.
• Addressing developmental challenges: The CEPA provides a platform for addressing key developmental challenges faced by both countries, such as energy and food security, sustainability, and agriculture. Further efforts can be made to leverage this platform to achieve meaningful progress in these areas.

Conclusion

• The UAE-India CEPA has unlocked new possibilities for multi-sectoral collaboration and partnerships, leading the nations to build competitive, resilient, sustainable, and vibrant economies.

Mains Question

Q. India-UAE completed its one year of Comprehensive Economic Partnership Agreement (CEPA) implementation. In this background discuss impact on the Bilateral Trade.

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