Quick Highlights of CEPA Agreement
- CEPA – Comprehensive Economic Partnership Agreement
- Bilateral trade agreement between India and UAE signed on 18th February 2022
- Officially implemented from 1st May 2022
- An established process to promote and enhance trade between the two countries.
- Aim to enhance bilateral trade from USD 60 Billion to USD 100 Billion in the coming five years
- Major items – Agriculture, Oil & Gas, Petrochemicals, Jewellery, Metals, Minerals etc.
UAE and India have left no stone unturned in enhancing their bilateral ties in the years that have gone by. They have been enjoying excellent relations that have been persistent and historical via cultural bonding, political connections etc.
The India-UAE strategic partnership started in 2015, during the visit of the Prime Minister of India to UAE. Since then, both countries have been supporting each other through different activity zones and have been each other’s major trading affiliates.
Both nations have also singed a MoU for better infrastructure development and business growth. UAE has been a key source for India’s energy supply and petroleum reserves. The bilateral agreement aims at deepening the strategic relations between the two countries, raising the standard of living, and presenting greater employment prospects.
CEPA – The Bilateral Agreement Between India and UAE
CEPA stands for Comprehensive Economic Partnership Agreement and as the name suggests, it is a trade pact between two nations meant for enhancing the business opportunities at both sides, leading to increased revenue and better liaison. It encompasses trade talks in investment and services, trade facilitation, comprehensive customs competition. It also manages the supervisory aspect of trade covering all supervisory problems through the agreement.
The roots of CEPA go back early in the 2000s when India and UAE signed their economic agreement. Progressing ahead, over the years, it has now blossomed into a fine trade agreement. CEPA aims at increasing trade in areas of trade in services, trade assistance, laws of origin, government purchasing, economic assistance, investment etc.
The expected returns are
- India will gain from favoured market access suggested by the UAE on about 97% of its tariff lines accounting for 99% of Indian exports to UAE from sectors such as sports items, footwear, gems, gems, jewellery, furniture, wood products, agricultural products, medical items, engineering items, automobiles etc.
- The comprehensive value of the bilateral goods trade will grow to over US $ 100 Billion and service trade will grow to over US $ 15 Billion in a span of 5 years.
- The exporter community will leverage the bilateral agreement and go in for the best of business opportunities like data analytics and market intelligence.
Key Features of CEPA Agreement
The salient features of the CEPA showcase the following trade goods and services, between the India and the UAE:
- In trade services and goods
- Rules of Origin
- Sanitary and technical barriers to trade
- Dispute settlement
- Customs processes
- Pharma items
- Telecom industry
- Sanitary measures
- Intellectual property rights
- Government purchasing
Salient Advantages of CEPA
- There will be an advantage from favoured market approach for all labour concentrated areas like textiles, sports, plastics, gems, jewellery, engineering items, agricultural and wood items, medical items, automobiles etc.
- Trade-in services – Increased trade in wider service domains like communication, distribution, environment, finance, healthcare, travel and tourism, recreation and cultural, transport, pharmaceuticals etc.
- Larger market access with lesser charges for trading in a variety of goods via preferential tariff rates owing to lesser or no custom duty on certain goods. The tariff and custom duty are applicable based on the goods and nature of goods.
- Those goods which are sent to India from the UAE, with the Rule of Origin (RoO) will be offered one of the following statuses – Tariff Reduction (TR), Tariff Elimination Immediate (TEI) and Tariff Elimination Phased (TEP). They will be offered reduction in customs duty almost reaching 0% based on certain conditions, spanning over a range of a few years.
- The tariff list for Indian items that are imported in UAE include metals like platinum, crude oil, petroleum oil, vegetables, fruits, non-wired glass, tubular containers, flat rolled iron or steel, gears, transmission elements
- Complying with the rules of origin is a must for any item to avail the favoured tax remedy. Proper proof of documentation must be submitted for the same.
- Easy to follow customs processes and trade facilitation, for cross border goods trading. This includes custom clearance, lessening the tedious and long custom processes and following the apt custom management processes.
- Recognition of the invoice declaration of origin by the authorized signatory. With this, gone is the need for issuance of a traditional certificate of origin.
- Services in each other’s territory for better cross border trading in areas of accounting, medicine, architecture, healthcare, nursing, and many more
- Teams allowed to work freely without much restriction, mutually respecting and recognizing each other’s area of work, licenses, certifications etc.
- Access to a larger global market serving increasing number of industry segments, hence widening the scope of business for both countries
- Faster route to completion of work through bilateral cooperation, reducing waste of time over pre-inspection of work, thereby fast-tracking approval processes, registration processes and implementation
A Good Read: UAE’s CEPA pacts to grow economy by 2.6% by 2030
Let the Bond Between UAE and India Blossom Further
The above list is not complete. There are other advantages that add to the India-UAE CEPA: collaboration on exchanging communication, for agreement on TBT, information discussion between the two tax agencies, encouraging trade opportunities for small and medium sized organizations and precision on government purchasing.
Overall, the CEPA has come out as a promising agreement for all those who seek to start their own business in the UAE or in Dubai. Setting up your own company in the Gulf has been a dream come true for many aspiring entrepreneurs. CEPA will assist all those business owners to fulfil their dream. Adding to the assistance, we offer exemplary company setup services in UAE so that you can focus on your forte of work and we take care of all formalities and processes involved in the company formation process. Associate with us and experience a hassle-free company setup process, for a bright future in the UAE.