India's exports to UAE likely to grow by 60% to $50 billion by FY27

Officials expect exports to touch $50 billion during the same period

As India’s Comprehensive Economic Partnership Agreement (CEPA) trade deal with the United Arab Emirates (UAE) became the ‘fastest used’, government officials hope exports to the nation will touch the $50-billion mark by financial year 2026-27 (FY27).

“In 2026-27, we will be completing five years of (signing) CEPA, and we should be able to reach $50 billion exports,” commerce secretary Sunil Barthwal told reporters on the first anniversary of the agreement.

“The trade between the two countries has grown significantly. Labour-intensive, emerging sectors have witnessed growth…The utilisation of CEPA has been remarkable. Compared to other free trade agreements (FTAs), in this FTA, a lot of the trade is happening through preferential routes,” Barthwal said.

According to an analysis by the commerce department, during May 2022 and March 2023, India-UAE CEPA has surpassed almost all other FTAs, in terms of utilisation. The number of certificates of origin (COO) has been the highest in India- Association of Southeast Asian Nations (ASEAN) at 1.49 lakh. This was followed by the trade deal with UAE as 54,142 COOs were issued to exporters to avail concessional duty advantage under the trade pact.

However, finer details of the utilisation of the trade deal will be clear after a joint mechanism, set up by both the nations, meet next month and finer exchange of data is done with UAE, government officials said.

According to the provisional data compiled by the Department of Commerce, India exported goods worth $31.3 billion during the financial year April-March of 2022-23 (FY23), up 4.8 per cent year on year (YoY). During the same period, India’s overall merchandise exports witnessed a 5 per cent growth - at $444 billion.

The jump in exports can be attributed to higher demand by sectors like gems and jewellery, machinery, and automobiles. Exports of products such as iron and steel, and textiles witnessed a contraction, due to the imposition of restrictions and tepid demand, respectively.

India will also look into other trade issues such as ease of doing business, and challenges related to rules of origin or certification, and work on easing them. These issues will be addressed through the joint mechanism.

As far as imports are concerned, inbound shipments of oil jumped 36 per cent to $27.7 billion during FY23. Imports of aircraft, spacecraft, and their parts jumped to $1.9 billion from $39 million a year ago.  

While the trade deal with UAE kicked in from May 1 last year, government officials said that data for the month of April, 2022 was also included in the analysis to maintain simplicity. Data for the month of April, 2023 will be released by the commerce department on May 15.

Under the trade agreement, both countries have extended tariff concessions on the export of products of mutual interest. UAE offered concessions to India on over 97 per cent of its tariff lines amounting to 99 per cent of trade, in terms of value. India has offered preferential access to the UAE on over 90 per of its tariff lines, including lines of export interest to the UAE.