Prime Minister Narendra Modi is in UAE for a day-long visit to enhance and strengthen bilateral ties between the two countries. He met with UAE President Sheikh Mohamed bin Zayed Al Nahyan, who is also the Crown Prince of Abu Dhabi.
India-UAE comprehensive strategic partnership has been steadily strengthening. The Ministry of External Affairs said PM Modi’s visit will be an opportunity to identify ways to take this forward in various domains, such as energy, education, healthcare, food security, fintech, defence and culture. This is also an opportunity for the two nations to discuss cooperation on global issues, most importantly, in the context of the UAE’s Presidency of COP-28 and India’s G-20 Presidency in which the UAE is a special invitee.
Having arrived in Abu Dhabi after a successful two-day visit to France, Modi told reporters that India and the UAE are engaged across a wide range of sectors, like trade, investments, energy, food security, science and technology, education, fintech, defence, security, and robust people-to-people ties.
Riding High on CEPA
Sources say the two countries will review their progress in bilateral relations following sealing a landmark trade agreement. India-UAE sealed the Comprehensive Economic Partnership Agreement (CEPA) in February 2022. CEPA has made a significant impact on India’s Bilateral Trade with the UAE. It touched historic high during FY2022-23, trade increased from $72.9 Billion (April 21 – March 23) to $84.5 Billion (April 22 – March 23), a 16 percent year-on-year increase. Through CEPA, UAE exporters benefit from greater access through preferential tariff rates.
Dr Thani bin Ahmed Al Zeyoudi, UAE’s Minister of State for Foreign Trade, said non-oil trade between the two countries is expected to reach $100 Billion a year by 2030. He highlighted that CEPA was designed to deliver a new era of growth and opportunity.
“There is little question that the UAE-India CEPA will come to be regarded as a significant milestone in the history of both countries. By removing or reducing tariffs on 80 percent of goods, eliminating unnecessary barriers to trade, creating new platforms for investment, and opening government procurement to each other’s private sector, the UAE-India CEPA was designed to deliver a new era of growth and opportunity.”
The UAE minister noted that there has been an increase in bilateral trade flows. CEPA has added considerable resilience to East-West supply chains and developing a new trade corridor that connects Asia with the Middle East and Africa (MENA). “We have seen major logistics providers adding capacity on these routes, including the launch of Maersk’s Shaheen Express to link India to the UAE and Saudi Arabia, while SeaLead are offering a new India-Dubai-East-Africa (IDEA) route. We have witnessed significant new investment flows.”
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Rupee-Dirham Trade
India and the UAE are also very likely to announce the rupee-dirham payment mechanism for bilateral trade. New Delhi would use this to pay for oil and other imports from the United Arab Emirates. Presently, India pays the UAE in dollars for its oil. Through this new payment mechanism, India would eliminate dollar conversions.
The central banks of both countries have been in talks for more than a year now, discussing this new payment mechanism to make the rupee-dirham trade happen. This will significantly lower the cost of transactions. This will also make it easier for Indian companies to trade with sanctions-hit countries like Iran and Russia.
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