According to the father of Economics, Adam Smith, the three gateways that lead to a prosperous nation are freedom to pursue our self-interest, specialisation, and freedom of trade. The recent trade agreement signed by India and the UAE is based on this foundation of thought.
So, what does this trade agreement signify?
The two countries signed the Comprehensive Economic Partnership Agreement or CEPA in a record of 88 days, and it will come into force from May 2022. After the USA, the UAE is India’s third-largest partner and second-largest export destination. The pact aims to increase the bilateral merchandise trade between countries to $100 billion by 2030.
Both the countries have plenty of benefits to reap from this trade pact. To begin with, the CEPA aims to foster and boost the economies of both countries and empower the societies there within. It is expected that the agreement would generate around 10 lakh jobs across labour-intensive sectors. This calls for celebration for the blue-collar workers as they are about to benefit tremendously from this pact!
The CEPA covers goods and the service sectors of telecommunications, tourism, finance and many more under its umbrella. This broad spectrum also encompasses areas like digital trade and intellectual property rights. Considering the current pandemic, the pact enables duty-free tariffs so that India can cater to the hospital segment of the UAE through institutional selling of home textiles like bed and bath linen and contract textiles.
Pertaining to metal trade, India has given duty concession on gold exported from the UAE, while Indian exporters will attract zero per cent duty on jewellery. India usually exports precious metal, stones, gems, jewellery, and food specimens to the UAE, ensuring smooth sails for such trades.
Moreover, the agreement sheds light on domestic industries, as a separate exclusion list for some products has been curated so that the goods under that list would remain out of the deal. This would ensure the interest and safety of local businesses in both nations, as it would open up opportunities for small-scale businesses and budding entrepreneurs by benefiting Indian and UAE businesses through reduced tariff rates and better market access.
In my opinion, this agreement is an excellent step towards economic prosperity and harmonious social development of both nations. A fool-proof and efficient implementation of this agreement will signify the dawn of a highly prosperous bilateral trading relationship between the countries.
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