The United Arab Emirates and India have signed a free trade deal that is expected to double bilateral non-oil trade to $100bn within five years as the Gulf state ramps up its economic partnership with its second-largest trade partner.
The comprehensive economic partnership agreement is expected to boost growth, exports and job creation in both nations, said Thani Al Zeyoudi, the UAE’s minister of state for foreign trade. “It’s a comprehensive win-win,” he told the Financial Times.
Nirmala Sitharaman, India’s finance minister, on Thursday described a deal with the UAE as a gateway for trade into the Gulf and Africa. “This is an outcome of several years of engaging,” she said. “The UAE is the threshold of the entire African Union and the Middle East . . . An agreement with the UAE opens the doors for India in these two regions as well.”
The UAE expects the deal to add $9bn, or 1.7 per cent, to gross domestic product by 2030. It also forecasts an increase of exports to India by 1.5 per cent, or $7.6bn, and imports to the Gulf state rising by $14.3bn, or 3.8 per cent, by the end of the decade.
It also expects the pact to deliver an additional 140,00 skilled jobs into its workforce over the same timeframe.
“We will continue to encourage talented people to the UAE and there will be flexibility over visas in priority sectors for people to come and work with us,” said Zeyoudi.
The UAE has a population of 10mn, of which about 9mn are expatriates.
The elimination of tariffs on key commodities, such as aluminium, copper, steel and various petrochemicals is one benefit of the deal, he said. Overall, about 80 per cent of products and services will have tariffs removed, said Zeyoudi.
Anti-dumping measures and rules of origin are also clearly set out in the deal to protect manufacturers, he added.
Under the deal, Indian and Emirati businessmen will be able to apply for various government contracts in each country.
Finalising a deal with the UAE is a coup for India, which has been on the hunt for bilateral trade agreements since quitting the pan-Asian RCEP agreement over concerns about China’s membership.
Free trade deals remain controversial in India, and the country has long sought to guard access to large sections of its economy. But Prime Minister Narendra Modi’s government has in recent months sought to accelerate the completion of trade deals as activity rebounds from the Covid-19 pandemic.
India is also close to finalising a pact with Australia, whose trade minister visited New Delhi last week. India started trade talks with the UK last month after a visit by British trade minister Anne-Marie Trevelyan, and last year relaunched EU talks.
The UAE sees trade as a central part of its drive to diversify its economy away from oil as it navigates itself out of the pandemic. The Gulf monarchy is targeting a doubling of its overall economy from $381bn to $762bn by 2030. The country is also aiming for comprehensive economic partnerships with Israel and Indonesia within the next couple of months.
The UK has opened negotiations with Gulf Cooperation Council countries, but in the event of slow progress with the six-member bloc, the UAE is willing to open bilateral trade talks, officials have said.