MSMEs And Startups To Benefit From India-UAE Trade Pact

India and the United Arab Emirates, on 19 February 2022, consensually signed the Comprehensive Economic Partnership Agreement (CEPA) with a farsighted approach of strengthening the bilateral relations and boosting trade and investment between both countries. As India-UAE celebrated the Golden jubilee of Diplomatic Relations, this deal is said to be an important step for trade and business.

The Comprehensive Economic Partnership Agreement (CEPA) is a type of free trade agreement that involves the negotiation of services, investments, and other economic issues. Among the areas that it may negotiate are trade facilitation and customs cooperation, competition, and intellectual property rights.

A virtual meeting took place on Friday, 19 February, in which a Memorandum of Understanding (MoU) was signed between the International Financial Services Centers Authority (IFSCA), GIFT City and the Abu Dhabi Global Market Financial Services Regulatory Authority (FSRA).

Prime minister of India, Narendra Modi, Announced CEPA as the biggest trade pact in the last seven years. He welcomed investment from UAE into Jammu and Kashmir saying that the initiative would open new routes for regional trade and connectivity and will be responsible for advancing the “collective interests” of India, Israel, the UAE and the United States.

The UAE, is India’s second-largest export destination after the US, with exports valued at approximately USD 29 billion in 2019-2020. Additionally, UAE is also the eighth-largest investor in India, having invested USD 11 billion between April 2000 and March 2021, while investment by Indian companies in the UAE is estimated to be over USD 85 billion.

“This agreement will herald a new age in our financial relations. Our trade in the next five years will increase from USD 60 billion to USD 100 billion,” said PM Modi, thanking Crown Prince of Abu Dhabi Sheikh Mohamed bin Zayed Al Nahyan who participated in the summit virtually.

“Last month the Lieutenant Governor of Jammu and Kashmir paid a successful visit to the UAE. After that several Emirati companies have displayed interest in investing in Jammu and Kashmir. We welcome the UAE’s investment in the logistics, healthcare, hospitality and all other sectors of Jammu and Kashmir,” the Prime Minister said.

Minister of Commerce and Industry, Piyush Goyal, on this pact said, “The pact will not only enhance India's commercial ties with the Emirati nation, but also provide an "entry point" in several parts of Africa and the Middle East.”

“Both our countries have been working with partners with similar ideas. I am confident that the grouping of ‘India-UAE-Israel-USA’ will advance our collective goals, especially in the fields of technology, innovation and finance,” Prime Minister said announcing the broader contours of the trade deal.

The Comprehensive Economic Partnership Agreement (CEPA), which has been inked with the United Arab Emirates (UAE), will benefit the startups, Micro, Small and Medium Enterprises (MSMEs), and all sections of the country's businesses, Union Commerce Minister Piyush Goyal said on February 19. He also mentioned that “The deal will open up to 10 lakh jobs for the young people in the country.”

Commenting at the signing of the agreement, Sanjiv Mehta, President, FICCI said, “We in FICCI applaud the leadership of our two countries in making CEPA a reality in record time, even amid a pandemic. There are many areas which will benefit from this agreement. However, one area of great mutual interest is innovation and start-ups, led by technology driven processes. We can visualise partnerships in health-tech, edu-tech, fin-tech, Industrial Revolution 4.0 and many more areas. Indian Industry feels such engagements will also help in tapping global opportunities together, particularly in the GCC and African markets.”

With this FTA there will be an immediate boost in people to people contact too. The relationship will transition from traditional to tech-led business and enhance the prosperity of our people as a natural consequence.