Economies of India and the UAE can benefit significantly from their free trade agreement by sharing knowledge and best practices in education, energy, skills and defence, according to a report by Deloitte.

Both countries have implemented the Comprehensive Economic Partnership Agreement (CEPA) from May 1 this year to boost bilateral trade and investments. It is aimed at increasing the trade to $100 billion in the coming years.

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Muraleedharan was speaking at a workshop organized by FICCI in collaboration with Joint Directorate General of Foreign Trade on CEPA Agreement.

"Under the preferential trade agreement, the two economies may benefit from sharing knowledge and best practices in several areas of mutual interest," the report said.

It said the Indian economy is heavily dependent on crude oil imports to meet its domestic requirements and the current geopolitical tensions between Russia and Ukraine and shrinking supplies from Iran are further affecting macroeconomic fundamentals.

"These turbulences suggest that India must work towards decreasing its energy dependence by exploring alternative fuels and diversify its crude oil suppliers to ensure undisrupted supply,'' it said.

Energy partnership

The report noted that under the India-UAE energy partnership, the UAE has committed to meet India's energy requirements at competitive rates. It has promised to assist the Indian economy in building strategic petroleum reserves; developing sectors; and conducting training and taking human resource development initiatives in the energy sector.

"This will help India become more self-reliant in energy," the report said, adding that the agreement will also enable increased employment opportunities for the Indian workforce in the Gulf region and contribution to India's remittance earnings.

In other sectors

It further said the agreement plans to harmonise digital trade and e-commerce between the two countries. The cooperation may be extended to upcoming areas, such as fintech lending and embedded financing.

On food security, it said the UAE plans to invest $2 billion in the construction of food parks in India to maximise crop yields and in turn, ensure its food security.

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It added that opportunities are high for the UAE to invest in India where seven mega parks for the pharmaceutical sector and medical devices have been announced in 2020.

Prospects in the UAE

Sectoral opportunities for India in the UAE exist in oil and gas, textiles, healthcare, pharma, real estate, construction, and gems and jewellery segments.

"Tariff concessions offered to the UAE in gold will lower input costs, boosting exports to the UAE. Besides, India has competence in jewellery making and design; the two countries can gain from sharing their expertise and adding value in the field of gems and jewellery," it added.

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Similarly, sectoral opportunities for the UAE businesses in India are in chemicals, logistics, and infrastructure.

CEPA implementation

Jehil Thakkar, Partner, UAE Corridor Leader, Deloitte India, said the treaty's success would depend on its effective implementation in both countries. This free trade agreement, he said, will give Indian companies an opportunity to enter a large global market and scale rapidly.

"The UAE's ease of doing business and a place in the Gulf Cooperation Council (GCC) makes it an attractive proposition for Indian companies, especially start-ups. The Emirates' keen interest in fostering Indian start-ups, by providing them with an ecosystem and financial support, can act as a boon for these innovation-oriented, disruptive companies," Thakkar said.

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The CEPA offers Indian start-ups the opportunity to gain access to additional GCC countries, he added.

"The CEPA will support the UAE's growth aspirations to become a trading, talent, and business hub of the world...It will also enhance cross-border cultural and people-to-people exchanges," he added.