The India-UAE free trade agreement or Comprehensive Economic Partnership Agreement CEPA – which came into force on May 1, 2022 has given a strong boost to bilateral trade between both countries. Trade between both countries was estimated at $85 billion in 2022-2023 (a 20% jump from the previous year). India’s Commerce and Industry Minister, Piyush Goyal while commenting on the need for India and UAE to push the level of bilateral trade beyond $200 billion had said: “We should reset our goals and look for much broader canvas in which this partnership should work and possibly look at going up to USD 250 billion between UAE and India by 2030.”
Ever since the signing of the CEPA, non-oil trade between both countries has also increased significantly.
UAE Investment in India
It would be pertinent to point out, that the CEPA signed between both countries has also resulted in a rise in UAE’s investment to India. The Gulf nation became the fourth largest investor in 2022-2023. Foreign Direct Investment (FDI) from UAE to India rose from a little over 1 billion (1.03), in 2021-2022 to $3.35 billion in 2022-2023.
During Indian Prime Minister, Narendra Modi’s visit to UAE in February 2024 an investment treaty with the UAE was signed. While commenting on the significance of the treaty, Modi said: “The treaty will have a long-term impact. The fact that we are moving forward in this direction will be significant.” This treaty is likely to give a strong boost to investments in both countries. Both countries have already begun trade using their local currencies.
Economic linkages between New Delhi and Abu Dhabi have strengthened not just at the bilateral level. Cooperation between India and UAE, in various areas like energy and food processing has also got a push under the umbrella of the I2U2 (US, UAE, Israel, India) — also referred to as West Asia Quad.
State governments and India-UAE ties
India’s state governments have emerged as important stakeholders in ties with UAE. One reiteration of this point is the visits by Chief Ministers, of various Indian states, to UAE. Some of the Chief Ministers who have visited the UAE in recent years are Kerala CM, Pinari Vijayan (February 2022, June 2023), Tamil Nadu CM, M Stalin (March 2022), Haryana CM, Manohar Lal Khattar (October 2022), West Bengal CM, Mamata Banerjee (September 2023), Uttarakhand CM, Pushkar Dhami (October 2023) and Telangana CM, K Revanth Reddy (January 2024). The focus of these visits has been on drawing FDI from UAE — especially in areas like infrastructure and tourism – interactions with the Indian diaspora in UAE and giving a further thrust to people to people linkages between both countries.
The UAE President, Mohamed bin Zayed Al Nahyan had visited India in January 2024 for the Vibrant Gujarat Summit.
It would be pertinent to point out, that UAE embassy in India — like those of several other countries — also has been pro-actively engaging with Indian states and exploring economic opportunities across states in areas like infrastructure, tourism. The UAE Ambassador to India, Abdulnasser Alshaali has closely interacted with several state governments and met with Chief Ministers of Andhra Pradesh, Gujarat and Kerala.
India’s state governments and the India-UAE CEPA
Indian states are also seeking to benefit from the Free Trade Agreement (FTA). During her visit to UAE in September 2023, Mamata Banerjee met with Thani-Al-Zeyoudi, the UAE Minister of State for Foreign Trade. The Chief Minister highlighted the fact that, “..nearly 12% of West Bengal’s total goods exports find a home in the UAE.”
Exports from the Eastern Indian state to UAE included; iron, steel, tea, readymade garments, telecom instruments and petroleum products. Al Zeyoudi also flagged the fact that UAE’s trade with Bengal accounted for 5% of overall UAE-India trade.
The western Indian state of Maharashtra has also likely to benefit significantly from the FTA. According to estimates, exports from Maharashtra to UAE have risen by 23% (some of the goods include. The FTA is also likely to give a boost to Maharashtra’s agriculture sector – as agricultural products, from the state would have greater access to the UAE market. It would be relevant to point out that a significant percentage of UAE’s investment in India has been in Maharashtra.
More recently, a meeting with Chennai based exporters was held by the UAE-India CEPA Council (UICC), in collaboration with the Confederation of Indian Industry (CII). During this meeting, several exporters were present. While commenting on the CEPA and the economic importance of Tamil Nadu, the UAE-India CEPA Council Director Ahmed Aljneibi said: “We aim to go around the country, especially within the state of Tamil Nadu. I believe there are different opportunities here. Every city has a specialisation in terms of industry, and we aim to explore that and inform them of the opportunities that they can find.”
In conclusion, the India-UAE CEPA is likely to give a strong fillip to economic ties between both countries. India’s state governments are bound to play an important role in the UAE-India relationship – especially the economic sphere. It is important for both New Delhi and the state governments to work together for bolstering bilateral ties as well as ensuring that state governments benefit from the CEPA.
[Photo by India in UAE/Twitter]
The views and opinions expressed in this article are those of the author.
Tridivesh Singh Maini is a New Delhi based analyst interested in Punjab-Punjab linkages as well as Partition Studies. Maini co-authored ‘Humanity Amidst Insanity: Hope During and After the Indo-Pak Partition’ (New Delhi: UBSPD, 2008) with Tahir Malik and Ali Farooq Malik. He can be reached at [email protected].
