India-UAE CEPA To Boost Apparel Exports

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Highlights

  • India and the UAE signed the trade pact after concluding negotiations in a short time of 88 days.
  • The pact aims to take two-way commerce to the USD 100 billion mark in over five years.

United Arab Emirates (UAE) could once again become India’s largest apparel market, following the signing of the Comprehensive Economic Partnership Agreement (CEPA) between the two countries. India may get duty concessions on textiles and apparel, gold jewellery, engineering goods, food products, and other labour-intensive sectors under the free trade agreement (FTA) with the UAE.

The deal will not only boost India’s exports, but also facilitate easier movement of Indian workers and professionals to the UAE. It is also expected to give Indian industry access to other markets in the region.

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The FTA negotiations had started in September 2021. Engineering exports to the UAE are expected to double in the next five years from the current US$ 4-5 billion and create 100,000 jobs on account of tariff concessions.

India’s exports to the UAE grew by 77% year-on-year in April-December 2021 to US$ 20 billion, accounting for 6.6% of India’s total outbound shipments.

Experts said the deal is expected to boost job creation and economic growth, provide cheaper products to Indian consumers and lead to lower input costs for many products.

Welcoming the signing of the CEPA, Apparel Export Promotion Council (AEPC) Chairman Narendra Goenka said that it will further strengthen India’s dominant position in the UAE. “India exports US$ 1,515 million worth of apparel to the UAE as against its total imports of US$ 3,517 million. India enjoys a 43% share in UAE’s total apparel imports. The trade pact would result in preferential import duty for Indian readymade garments, strengthening India’s position in the UAE market. This will further strengthen the dominant position of Indian apparels in the UAE.”

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He added that Indian apparel exports to the UAE also cater to the needs of Saudi Arabia, Kuwait, Bahrain, Oman and the UK.

Federation of Indian Export Organisations (FIEO) President, A Sakthivel said that the pact will be beneficial to Indian exports particularly for the labour-intensive sectors like agriculture and processed food including meat and marine products, gems and jewellery, apparel and textiles, leather and footwears.

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