Landscape mode is disabled.
Please rotate your device for better experience.

UAE-India CEPA Deal; Comprehensive Economic Partnership Agreement to Simplify Customs Procedures and Reduce Logistics Costs

Home/Blog/UAE-India CEPA Deal; Comprehensive Economic Partnership Agreement to Simplify Customs Procedures and Reduce Logistics Costs

The UAE, for the last few decades, has been aggressively working towards diversifying its economy in a bid to reduce its overdependence on oil, which is seen as a depleting natural resource now. From introducing several state-backed business policies, developing Special Economic Zones, and creating world-class ports and supporting infrastructure, the government has been going all guns blazing to develop a sustainable economic future. In order to further cement its ambitious plan, UAE signed a mega-deal with India – Comprehensive Economic Partnership Agreement (UAE-India CEPA) that looks at strengthening the business relationship between the two countries and boosting business for industries other than oil. This is probably the first bilateral trade accord completed by the UAE and India’s first bilateral trade agreement in the GCC region.

The trade relations between India and the UAE have been on the positive side for decades. The two countries have depended on each other for years for trading important goods and have benefited due to good bilateral relations. Historically, the trade was mostly about India importing items like dates, pearls, and fisheries until the region discovered its oil resources. After UAE became a unified entity in 1971, it started exporting more and more from India and the trade relations became stronger during this period. But the real change came around the early part of the 90s when Dubai became a trading hub in the region and started making its impact on a global stage. This was the time when India was witnessing economic liberalization, a move that hastened the country’s position as an emerging economy worldwide.

The two countries are now looking at taking things further through such bilateral initiatives. As of 2019-2020, the India-UAE trade was valued at US$ 59 billion, making UAE India’s third-largest trading partner of the year. UAE is also the second-largest export destination for India, second only to the US, and an estimated amount of US$ 29 billion is traded between the two countries. In return, India is UAE’s number one trading partner when it comes to non-oil exports, which account for almost 14 percent of UAE’s total export of non-oil products across the globe. These are huge numbers and it is quite obvious that with the two countries getting such heavy returns through collaborations and partnerships, they are only looking to strengthen the ties.

How does UAE benefit from CEPA?

Now, with UAE-India CEPA being signed and all set to kick off soon, things are only going to go upward from here. If estimations are to be believed, the new tie is all set to trade around US$ 100 billion in the next five years, increasing the business exchange exponentially. With India’s growing status as an emerging economic power and the UAE’s efforts to establish itself as one of the leading business hubs in the GCC region, this deal is sure to benefit both countries.

The structure of the deal is such that it will reduce tariffs, enhance market access, as well as give the trading corridor from Africa to Asia a new lease of life. All this is sure to lay a new foundation for growth and prosperity in the entire region. It is set to bring about a noticeable change in the way logistics businesses trade from here on as the new deal will simply customs procedures, lower logistics costs, and open up new horizons for professional services.

India, in the last decade, has made its presence felt by exporting several goods and services. Indian products have not only traveled across nations, but they have also made a positive impact on consumers. The UAE-India CEPA will help in deeper penetration of Indian products in the UAE markets, apart from getting disbursed into the GCC region, Commonwealth, and independent states as well as Africa and beyond.

But one of the biggest benefits that the UAE is set to get from this deal is a boost to its logistics sector. For the last two decades, UAE has been pushing its logistics sector to come of its own so that this sector can provide solid support to UAE’s economic diversification efforts. The massive development of different ports in UAE, Temple Run Mod providing supporting infrastructure around these ports, development of industrial areas and business hubs, and modernizing these ports and business hubs with the latest technological support have made the logistics industry one of the fastest emerging industries in the region. The country’s strategic geographical local has helped even further.

With CEPA, the logistics industry will definitely get a huge push, which in turn will strengthen the country’s economy. While the logistics industry is certain to see a positive impact due to CEPA, other sectors like business services, telecommunications, education, construction and development, finance, tourism, health sector, the environment, air transport services, and the hospitality industry will be some of the main beneficiaries of this agreement.


Get a Quote

  • ALSI awarded Best Customs Clearance Broker for 2 Consecutive Years ( 2021 & 2022 ) by Oman Customs