India’s Exports to UAE Projected to Reach US$32 Billion in FY 2022-23
India’s exports to UAE are expected to rise to US$32 billion in FY 2022-23 (+14% YoY) due to CEPA trade deal effective May 1, 2022, per Commerce Ministry. This is backed up by a marked increase in the certificates of origin issued by India to exporters, which enable them to access the India-UAE CEPA trade concessions.
India’s exports to the UAE may touch US$32 billion in FY 2022-23, as per Commerce Ministry projections. This would be a 14 percent increase over the US$28.04 billion worth of Indian exports to the Gulf trade hub recorded in the last financial year. Pre-COVID, Indian exports to UAE had touched US$31.2 billion in 2016-17.
India and the UAE are presently discussing the integration of their customs and logistics portals to enable real-time tracking of shipments and secure priority entry in ports. The move will be in line with their CEPA agreement.
Latest India-UAE trade numbers
Between June 2022 and February 2023, Indian exports to the Emirates rose 10.4 percent year-on-year (YoY) to US$23.03 billion, compared to a 0.9 percent export growth registered in India’s total exports to other markets.
Non-oil exports from India to UAE were worth US$17.36 billion during the same period, increasing by 6.5 percent YoY. For comparison, India’s non-oil exports to the rest of the world saw a 4.2 percent drop in the June 2022-February 2023 period.
Indian imports from the UAE increased by 12.9 percent to reach US$38.95 billion in the June 2022-February 2023 period.
India-UAE CEPA a key enabler
The boost in India’s exports to the UAE can be seen as an intended outcome of the India-UAE Comprehensive Economic Partnership Agreement (CEPA), which came into effect May 1, 2022.
Exporters have gained from immediate duty concessions on most product lines like gems and jewelry, electrical machinery and equipment, machinery and mechanical appliances, coffee, tea, spices, sugar, man-made staple fibers, and edible vegetables.
According to an official source speaking to the media: “There has been a steady growth in utilization of the FTA [CEPA] as reflected in the monthly numbers of preferential certificate of origin (COO) issued that has stabilized over the last few months.”
The COOs are mandatory if exporters want to claim duty concessions under the CEPA. They authenticate that the export items have met certain standards stipulated in the agreement and are originating from India. Indian exporters will need to submit the COO at the landing port in the import destination.
Certificates of origin under the India-UAE CEPA are issued by 17 agencies from India, including the Export Inspection Council (EIC), and boards for spices, coir, and tobacco. COOs are being issued electronically to speed up processing times and boost trade.
As of February of this year, there were approximately 6,944 certificates of origin issued by India, a big improvement from the 2316 COOs issued in June of last year. In fact, between October to December 2022, 17,005 COOs worth US$3.33 billion were issued to exporters against US$5.45 billion worth non-oil exports during this period.
In December 2022, COOs worth US$1.1 billion were issued, with the lead segment being textiles – accounting for certificates worth US$303 million, followed by gems and jewelry at US$185 million, edible fruits and nuts at US$90.61 million, live animals at US$88.09 million, automobiles at US$38.79 million, and footwear at US$36.34 million.
Certificates of Origin Issued by India for Exports to UAE (May 2022 – Feb 2023)
Number of certificates of origin (COO) issued by India
In the June 2022-January 2023 period, India’s gems and jewelry exports to the UAE grew 16 percent to US$3.8 billion and electrical machinery exports rose 29 percent to US$2.6 billion. During the same period, automobile exports rose 38 percent to US$475 million.
Additionally, as per media reports in March, Indian exports worth US$1.3 billion have been benefiting from zero-duty market access in the UAE on a monthly basis as against US$2.72 billion of total outbound shipments.
Overall, the UAE is India’s third-largest trade partner, following US and China. Two-way trade between India and the UAE during the April 2022 to January 2023 period hit US$70.19 billion.
The India-UAE CEPA has eliminated duties on 90 percent of India’s exports to the UAE by value since coming into effect. Major gainers are items in the gems and jewelry, textiles, leather, and engineering goods categories. Oil is not a part of the CEPA agreement.
The two countries aim to hit US$100 billion worth bilateral trade (non-oil items) by 2030.
The UAE is a transshipment hub
As per Emirati news, India’s re-exports to the UAE rose 10 percent in 2022. Further, 11,000 new Indian companies were registered in Dubai, as per the emirate’s Chamber of Commerce.
Global headwinds slows trade in key segments
Global headwinds impacted overall export numbers for apparel despite CEPA incentives.
Similarly, Indian iron and steel exports to the UAE also declined, despite ease of government restrictions. The Indian government withdrew its export duty on steel and iron ore last November after a steep fall in export numbers in October; the duty had been imposed in May.
Trade in these segments could pick up in the upcoming fiscal, but will depend on global inflationary trends, among others.
Other agreements, partnerships, and investments
- On January 13, 2023, the Ministry of New and Renewable Energy for the Government of India and the Ministry of Energy and Infrastructure for the Government of the United Arab Emirates signed a Memorandum of Understanding (MoU) to encourage dialogue and collaboration in the development and investment of green hydrogen in India and the UAE.
- The UAE is interested in investing in India’s integrated food parks and 300MW hybrid renewable energy project in Gujarat under the I2U2 framework (India, Israel, USA, and UAE).
- Ducab Group, UAE maker of cables and metal products, have set up a regional office in Bengaluru, Karnataka, to better serve its clients in the energy and construction sectors.
- DP World has launched the Dubai Incubator Center in partnership with Invest India and the Start-Up Kerala Mission. This is a tech accelerator platform that focuses on innovation in India’s logistics sector.
- The Abu Dhabi Investment Authority is considering to set up its office in GIFT City, Gujarat.
- In February 2023, a UAE delegation of officials, business leaders, and entrepreneurs visited India to talk up collaboration and opportunities.
Also read: India-UAE Bilateral Trade: Trends and Outlook
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