INDIA-UAE CEPA (Syllabus: GS Paper 3 – Economy)

Context: As India reviews the Comprehensive Economic Partnership Agreement (CEPA) with the UAE, it should target the removal of duty concessions on gold, silver, platinum, and diamonds, and consider adjustments to rules of origin norms, according to the Global Trade Research Initiative (GTRI).

Global Trade Research Initiative (GTRI)

• About: A research Group focused on Climate Change, technology and trade.
• Aims:  To create high-quality and jargon-free outputs for governments and industry from the perspective of development and poverty reduction.

GTRI Report on India-UAE CEPA:

• Trade data showed that silver imports, largely coming from the UAE, surged more than 400% in July compared to period last year.
• The UAE is the third largest trading partner of India with $83.65 billion bilateral trade in 2023-24.
• As regards Comprehensive Economic Partnership Agreement (CEPA) , there are two things: one is the value addition norms and the second is reduction (of customs duties).
• India-UAE CEPA allows unlimited imports of gold, silver, platinum, and diamonds from the UAE into India with zero tariffs in the coming years.

o This will lead to significant annual revenue losses, move import business from banks to a few private traders, and replace top suppliers with Dubai-based firms.

India-UAE Comprehensive Economic Partnership Agreement (CEPA):

• Both countries signed the CEPA in February 2022 and a Local Currency Settlement (LCS) System in July 2023 to promote the use of Indian Rupee and AED (United Arab Emirates Dirham) for cross-border transactions.
• The CEPA came into force from May 1, 2022.
• The trade pact provides for numerous benefits, including the elimination and reduction of tariffs, fostering an open trade environment, and enhances market access for service providers across various sectors.