India and UAE Set to Supercharge Trade Beyond $100 Billion: What’s Next?


The India-UAE trade relationship is poised for an ambitious expansion, as both nations gear up to extend their landmark Comprehensive Economic Partnership Agreement (CEPA) to eight new sectors. This move is expected to push annual bilateral trade well beyond the $100 billion mark, a milestone that has already been achieved ahead of schedule.

Beyond Traditional Trade: New Sectors in Focus

The CEPA, signed in 2022 when bilateral trade stood at $60 billion, marked the UAE’s first comprehensive trade deal. Now, the agreement is set to encompass key emerging industries, including:

  • Artificial Intelligence

  • Financial Services

  • Digital Technologies

  • Logistics

  • Value-added Trade

  • And more…

According to Dr. Sahitya Chaturvedi, Secretary General of the Indian Business and Professional Council (IBPC), the deal has only tapped into about 40% of its potential so far. “We have reached the targets far ahead of schedule,” he said, highlighting the vast room for further growth.

Diversifying Beyond Oil and Gems

Historically, India-UAE trade has been dominated by oil, jewellery, and gemstones. But analysts have long advocated for a broader trade portfolio. The CEPA has already removed 80% of duties on goods between the two nations, with the goal of eliminating all tariffs within a decade.

One major initiative benefiting from the agreement is Dubai’s Bharat Mart, a massive showroom and warehousing project that will provide a platform for Indian traders, exporters, and manufacturers to access regional markets. Additionally, the trade agreement facilitates value-added exports, such as importing semi-finished marble from India’s Rajasthan province for processing and re-exporting from the UAE.

A Currency Shift: Trading in Rupees & Dirhams

Another game-changing development is the shift to local currencies for transactions. Under the CEPA, trade between India and the UAE no longer relies on the US dollar, allowing businesses—especially in the SME and logistics sectors—to transact directly in Indian rupees and UAE dirhams. This move has significantly streamlined trade, reducing currency exchange costs and enhancing financial stability.

Navigating Challenges: Addressing Concerns Over Precious Metals

While the agreement has seen rapid success, an ongoing review since October has focused on concerns related to the surge in the precious metals and diamond trade. India has raised concerns that potential loopholes and tariff concessions could impact domestic industries. However, Chaturvedi downplayed these worries, stating that reviews are standard for deals of this magnitude and that any issues are being addressed proactively.

Looking Ahead: A Stronger Economic Bond

The India-UAE trade relationship is evolving into a robust economic powerhouse. By expanding into future-focused industries, eliminating trade barriers, and leveraging local currencies, both nations are paving the way for a new era of economic cooperation.

With vast untapped potential still remaining, one thing is certain—this partnership is only just getting started. The question now is: how much further can India and the UAE push the boundaries of trade?

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