NEW DELHI — India and the United Arab Emirates (UAE) on Friday signed a Free Trade Agreement (FTA), which is set to reduce tariffs for 80 percent of goods and give zero duty access to 90 percent of India’s exports to the UAE.

The agreement, which is expected to come into effect in about 60 days, is expected to boost annual bilateral trade to $100 billion within 5 years of its adoption, up from about $60 billion currently.

The Comprehensive Economic Partnership Agreement was signed by Commerce and Industry Minister Piyush Goyal and the UAE’s Minister of Economy Abdulla Bin Touq Al Marri after 88 days of negotiations.

“This comprehensive economic partnership agreement covers a wide array of gains for both economies, provides opportunities for business in both economies, “ said Goyal.

The minister added the agreement would boost the country’s exports in a number of labor-oriented sectors including gems and jewelry, textiles, leather, footwear, sports goods, engineering goods, and pharmaceuticals.

Annual exports worth about $26 billion from India that currently attract a 5-percent import duty in the UAE are set to benefit.

“Held a bilateral meeting with the UAE delegation led by Minister of Economy Abdulla Bin Touq Al Marri and Minister of State for Foreign Trade, Thani Al-Zeyoudi. Both nations are entering a golden era of economic & trade cooperation with the signing of India-UAE CEPA,” tweeted Goyal.

The agreement covers areas including goods, services, rules of origin, Customs procedures, government procurement, intellectual property rights, and e-commerce.

“I’m confident that the UAE India Comprehensive Economic Partnership Agreement will be regarded as a towering achievement, a new era not only for our two nations but for global trade,” said Al-Marri, adding both countries had removed tariffs on over 80 percent of products.

An official from the Commerce Ministry said further tariff concessions were expected on both sides over 5 years that would lead to lower tariffs for 98 percent of exports and 90 percent of imports from the UAE.

Indian exports set to get zero duty access within a further 5 to 10 years, including electronic goods, chemicals and petrochemicals cement, ceramics and machinery accounting for about 9 percent of the value of current exports to the UAE.

Citing an example of tariff reduction, Commerce Secretary B. V. R. Subrahmanyam said: “We’ve given tariff concessions to UAE on gold, and they have eliminated tariffs on jewelry.”

Sources said India had agreed to concessional import duties on gold imports up to 200 tons per year. India imported about 70 tons of gold from the UAE in FY21.

Goyal said the agreement included robust rules of origin to protect both economies from misuse of the agreement by third countries, including a requirement of “melt and pour” for steel exports to qualify as domestically produced products from either country.

The agreement also provides a permanent safeguard mechanism to protect businesses in both countries to prevent “ any unnecessary or unwarranted surge in volumes of (imports) any particular product, according to Goyal.

Under the agreement, the UAE has also, in a first, agreed to facilitate market access and regulatory approval within 90 days for Indian pharmaceutical products and medical products that have been approved in developed jurisdictions such as the US, the UK, the EU, Canada and Australia.

Goyal noted that the deepening of the relationship with the UAE would also help Indian exporters gain access to other West Asian countries, Africa and some parts of Europe.

The CEPA is the first major trade deal signed by Prime Minister Narendra Modi government since first coming to power in 2014. UAE is India's third-largest trade partner globally, after the United States and China.

Bilateral trade between both nations stood at $43.3 billion as of 2020-21 and is spread across thousands of traded items. In 2019-20, the pre-pandemic year, trade between the two countries was estimated at $59 billion. The UAE is also home to 35 lakh Indian-origin persons.

The 880-page document covers topics such as free trade, digital economy, government procurement, strategic areas, Goyal said. Almost 90 percent of all traded items are set to benefit from the deal, he added.

He said that businesses of both countries would be protected from any sudden surges in volume of any product, through a permanent safeguard mechanism.

While it is currently engaged in discussing trade deals with as many as 8 nations, the deal with India has economic and strategic importance for the Emirates. "The projections are clear. It will add to 1.7 percent or $8.9 billion to our national GDP. It will raise exports by 1.5 percent," Al-Marri said.

The deal found a major mention in the India-UAE virtual summit hosted by Prime Minister Narendra Modi and Deputy Supreme Commander of the United Arab Emirates (UAE) Armed Forces & Crown Prince of Abu Dhabi Sheikh Mohamed Bin Zayed al Nahyan, also held on Friday.

"I am confident this will begin a new age of economic cooperation and growth for both our nations," Modi said.

Negotiations on the deal have been completed in a record time of just 88 days, having been officially launched in September 2021.

The latest deal is an ‘early harvest’ component of a far more comprehensive trade and economic partnership deal in the future. An early harvest trade deal is one in which both parties sign off on a set of relatively easily achievable deliverables. — Agencies