India may get duty concessions on gold jewellery, engineering goods, textiles, apparels, food products, and other labour-intensive sectors under the free trade agreement (FTA) with the United Arab Emirates (UAE), expected to be signed on Friday, two people said, requesting anonymity.
The proposed agreement is expected to provide greater market access for Indian exports. This will be India’s first major FTA as part of the comprehensive economic partnership agreement (CEPA) under the Bharatiya Janata Party-led government. The deal will likely boost India’s gems and jewellery, and engineering exports, besides facilitating easier movement of Indian workers and professionals to the UAE. It is also expected to give Indian industry access to other markets in the region, said experts.
During a virtual summit on Friday, Prime minister Narendra Modi and Sheikh Mohamed bin Zayed al Nahyan, the crown prince of Abu Dhabi, are expected to formalize the pact. The negotiations started in September. Engineering export to the UAE are expected to double in the next five years from the current $4-5 billion and create 100,000 jobs on account of tariff concessions once the FTA comes into effect. A ministry of commerce and industry spokesperson said details will be announced after the formal signing of the agreement.
India’s exports to the UAE grew by 77% year-on-year in April-December 2021 to $20 billion, accounting for 6.6% of India’s total outbound shipments.
Meanwhile, relief on the 5% duty on gold, silver and platinum jewellery under the most-favoured-nation treatment is expected to boost India’s gems and jewellery exporters, who have witnessed a steep decline in orders from India’s third largest trading partner. The UAE accounts for 80% of India’s plain gold jewellery exports and 20% of studded jewellery exports.
According to the Gems and Jewellery Export Promotion Council (GJEPC), exports to the UAE witnessed the highest fall of 41.50% between April 2021 and January 2022 on a year-on-year basis. India’s exports of studded gold jewellery declined from $1.04 billion in FY17 to $400 million in FY21, but are expected to rebound to $800 million if the duty is withdrawn, it said.
Experts said the deal is expected to boost job creation and economic growth, provide cheaper products to Indian consumers and lead to lower input costs for many products.
“Indian industry has strong export interest in sectors like gems and jewellery, engineering goods and textile and apparel. In these sectors, India will benefit if it gets greater market access,” Arpita Mukherjee, professor, ICRIER, said. “UAE is also strategically located to export to the UK and the EU. Some Indian firms have set up manufacturing units in the UAE for certain products (such as products with dairy content of over 10%) where direct exports from India to the UK, EU and Australia are presently banned,” she added.
The ministry of external affairs said on Wednesday that India and the UAE have collaborated closely during the pandemic in critical areas of healthcare and food security. “Bilateral trade, investment and energy relations have remained robust. The two sides are also strengthening cooperation in areas of renewable energy, startups and fintech,” it added.
Source : Live Mint
