The UAE and India are on track to surpass a target of $100 billion in bilateral non-oil trade by 2030 in the wake of the landmark free trade agreement signed in May 2022.
The two-way trade has increased 15 per cent since the signing of the Comprehensive Economic Partnership Agreement, Ahmed Aljneibi, Cepa Council Director, says. “The bilateral trade has increased almost 15 per cent since the CEPA entered into force on 1 May 2022. Our two countries are on track to far surpass the goal of achieving $100 billion in non-oil trade by 2030,” he said at a business roundtable meet in Jaipur.
The UAE is India’s second-largest export destination after the US, third-largest trading partner, and fourth-largest investor. India is UAE’s second largest trading partner after China.
Cepa brings cuts in tariff, fast-tracked approvals for business and access to trade zones. As a result, trade between India and the UAE touched historic highs going from $72.9 billion in FY22 to $84.5 billion in FY23. About 90 per cent of India’s exports to UAE now attract zero duty under the FTA with gems and jewellery, pharmaceuticals, food, and energy sectors, the key beneficiaries.
Dr. Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade, has said the value of the UAE’s direct investments in India reached about $17 billion by the end of September 2023, making it the seventh-largest investor in India globally and the first Arab country with a 3.0 per cent share of total foreign direct investment.
Indian investments in the UAE reached $8 billion, ranking second globally with a 6.0 per cent share of total foreign direct investment into the country. Thus, the value of the UAE-India mutual investments is $25 billion, 70 per cent of which is from the UAE to India, Al Zeyoudi said.
The UAE’s sovereign fund has been an active participant in the Indian stock market; Abu Dhabi Investment Authority holds 22 listed stocks with a net worth of over Rs34 billion, as per a December 2023 filing. This is across real estate, infrastructure, logistics, food, and other sectors. Adia is setting up a $4-5 billion fund to invest in India through GIFT City, Gujarat.
Since Prime Minister Narendra Modi assumed office in 2014, India has transformed its relationship with the UAE and other Gulf countries from one focused on energy, trade and Indian expatriates into a new framework encompassing political relations, investment, and defence and security cooperation. India’s priorities include attracting investments to increase economic growth, addressing regional security concerns, and enhancing its regional presence and influence.
In one of his last foreign visits before India’s general election in April–May 2024, Modi travelled to the UAE on his seventh visit since 2015and Qatar on February 13–15, highlighting the importance of the UAE as the third largest Asian economy’s key regional partner. The UAE is the only regional country that India engages with bilaterally, trilaterally (along with France) and, since 2021, in I2U2 quadrilateral grouping with the United States and Israel.
A recent move by the central banks of the two countries permitting the use of local currencies for cross-border transactions including trade, remittance, and investment flows also is giving the trade momentum a new fillip. India’s payment system, UPI, was linked with UAE’s instant payment system Aani in a move likely to benefit over 3.5 million Indians living in the UAE, and travellers between the two countries. India’s Rupay cards can also be used in the UAE.
The GCC is India’s largest regional-bloc trading partner. Trade with the GCC comprised 15.8 per cent of India’s total trade in FY2022–23, compared to 11.6 per cent of total trade with the European Union.