India, UAE Trade Deal is Finalised

NEW DELHI: India and the UAE have completed negotiations for a bilateral trade agreement, with an announcement to be made during PM Narendra Modi’s visit to the West Asian country in the first week of 2022, in a move that is expected to boost trade with countries in the Gulf as well as Africa.

Apart from lowering of tariffs, the trade pact — only the second since the one with Mauritius — is expected to include key provisions for easier movement of Indian professionals and workers to Emirates. While the UAE is already the largest base for the Indian diaspora, companies are expected to get more leeway in hiring workers from the country, with some of the eligibility test requirements also expected to be eased, sources familiar with the deliberations told TOI.

In addition, there will be a message to signal easier investment norms, with UAE entities expected to pump in money into creating critical infrastructure in India. On the import duty front, some of the areas of interest for India, such as food products, are expected to get concessions so that they can compete with products from other parts of the world more favourably. In return, some of the products from the petro-chem value chain will be allowed lower duty access into India. Government sources said the effort has been made to ensure that third country imports are not routed through minor value addition in the UAE, including those from other Gulf countries and China.

The UAE is part of the Gulf Cooperation Council (GCC), which was negotiating a free trade agreement with India several years ago, until the talks were abandoned. India as well as GCC had paused talks with several trading partners. The bilateral trade agreement with the UAE also marks a significant change in India’s stance as the Modi government had virtually stopped talks with all countries until it shed its inhibitions after its exit from RCEP due to the overarching presence of China.

Since then, it has entered into negotiations with the EU, the UK, Australia and Israel with some of the FTAs expected to be worked out in the coming months. With bilateral trade of $43 billion, UAE was India’s third largest trading partner during the last financial year, lagging China and the US. During April-October this year, it was the second-largest export destination for Indian goods.