India-UAE CEPA makes significant positive impact on India-UAE trade

New Delhi : The India-UAE Comprehensive Economic Partnership Agreement (CEPA) which came into effect on the 1st of May 2022 is already creating a significant positive impact on India-UAE trade. Indian exports to the UAE,excluding petroleum productsgrew from US$ 5.17 billion during June-August 2021 to US$ 5.92 billion during June-August 2022, which denotes an increase of 14%.

It is pertinent to note that India’s global non-petroleum exports during the same period (Jun-Aug 2022) grew by 3% on an annual basis. This implies the growth rate of India’s non-petroleum exports to the UAE is almost 5 times as that of India’s non-petroleum exports to the world.

Top 10 Products – On Absolute Change Basis, excluding petroleum products

Chapter Chapter Description Jun-Aug 2021 Jun-Aug 2022 Y-o-y Change (%)
85 Electrical machinery and equipment 549.1 916.53 67%
71 Gems & jewellery 1053.33 1404.73 33%
10 Cereals 107.93 281.36 161%
17 Sugars and sugar confectionery 33.04 111.49 237%
28 Inorganic chemicals 90.3 156.92 74%
84 Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof 211.34 267.89 27%
87 Vehicles and accessories thereof 122.06 169.03 38%
9 Coffee, tea, mate and spices 58.37 95.7 64%
7 Edible vegetables and certain roots and tubers 40.75 74.16 82%
33 Essential oils and resinoids; perfumery, cosmetic or toilet preparations 48.79 72.39 48%

Excluding petroleum related imports, Indian imports from the UAE during the same three-month period grew from US$ 5.56billion (June-August 2021) to US$ 5.61 billion (June-August 2022) or an increase of 1% in percentage terms.

It may be noted that India’s non-oil export growth of around 14% on year-on-year basis comes in the context of significant macroeconomic headwinds such as conflict in Ukraine, COVID-19 related lockdowns in China, rising inflationary pressures, expected Policy tightening in advanced economies, global growth slowdown and consequent reduced demand, reduction in global merchandize trade (growth slowed down to 3.2% in Q1 2022 vis-a-vis 5.7% in Q4 2021)etc.

WTO’s global trade growth forecast for the entire year 2022 was at 3% in April 2022. This forecast is expected to be revised downwards as the macroeconomic headwinds had worsened since April 2022.

Indian exports are likely to increase further in the coming months with increasing use of the CEPA by the exporters and with dedicated efforts from Department of Commerce, in association with Indian Mission in the UAE, through organization of a series of trade promotion events in the UAE during the current Financial Year.

The analysis of the India-UAE CEPA was carried out from the period of June-August 2022, excluding statistics of oil trade. The month of May has not been included for the purpose of the analysis as it is considered as a transitory period.Oil trade has not been considered as import increase in oil/petroleum products is largely on account of the rise in global prices and to a certain extent on an increase offtake in volumes. Further, it is pertinent to mention that bulk of the oil imports from the UAE are of Crude Petroleum, the demand for which is inelastic and the customs duty for which is very low.

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