India’s non-oil exports to the UAE have jumped 5 per cent to $15.2 billion in June-January 2022-23 (year-on-year), since the bilateral free trade agreement was implemented last year, with machinery and equipment, gems and jewellery, automobiles, cosmetics and toilet preparations and cereals emerging as the main beneficiaries of the pact, per government figures.

The country’s non-oil imports from the UAE have increased by 3 per cent to $16.8 billion, an analysis done by the Commerce & Industry Ministry highlighted.

“The increase in non-oil exports to the UAE in June-Jan 2022-23 period is encouraging as it has happened when overall non-oil exports from the country to the rest of the world declined 4 per cent. So there has been a positive effect of the CEPA, the extent of which is still being assessed,” an official tracking the matter told businessline.

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Total exports, including petroleum products, from India to the UAE in the June-January 2022-23 period increased 11.4 per cent to $20.4 billion while total imports, including petroleum, from the Gulf country during the period under consideration increased 15.8 per cent to $34.6 billion.

The India-UAE FTA, officially known as the Comprehensive Economic Partnership Agreement (CEPA), was implemented on May 1, 2022 and aims to double bilateral trade in goods to $100 billion and enhance trade in services to over $15 billion in five years. Tariffs on 97 per cent of India’s export lines to the UAE are to be reduced to zero under the pact, with 90 per cent taking place immediately in May 2022.

COO certificates

What is encouraging is the fact that there are indications that a considerable part of the exports to the UAE are taking place through the FTA route and not through the ordinary MFN route, the official said. “The number of country of origin (COO) certificates issued for exports to the UAE under the FTA were at 6,057 in January 2023 compared to just 415 in May 2022. This shows that the utilisation of the FTA is increasing,” the official said.

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COO certificates establish that items being exported at preferential tariffs under an FTA meet the stated value addition and other norms to prove that they originate from the partner country and are not from a third country.

Often exporters hesitate in using the FTA route as formalities, including getting COO certificates, have to be carried out and businesses feel that it would be a lesser hassle to pay the import duty and ship items through the ordinary non-FTA route. In fact, the utilisation rate of India’s FTAs with the ASEAN, Japan and South Korea is very low.

Dedicated efforts

“In the case of the India-UAE FTA, the Commerce Department is trying to help the exporters to whatever extent possible in getting the COOs so that they use the FTA route. Officials are putting exporters in touch with officials in the DGFT and also the EIC whenever needed,” the official said.

Exports of items to the UAE from India, which declined in the eight-month period, include iron ore and garments. “Exports of iron ore are expected to rise from February, as export duties stand withdrawn and its effect is expected to start showing from next month. However, since garments bought by the UAE are re-exported to markets such as Africa, an increase in India’s exports of the item would depend on revival of demand in those markets,” the official said.

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Dedicated efforts from the Department of Commerce to raise awareness about the India-UAE CEPA are on through regular industry interactions, the official said. The Indian Mission in the UAE was also helping in organising trade promotion measures, the official said.

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