India’s Exports to UAE Reached US$31.3 Bn in FY23: One Year Anniversary of CEPA

India’s exports to the UAE hit US$31.3 billion in FY 2022-23 (+11.8% YoY) due to the CEPA trade deal that became effective May 1, 2022, per the 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 were projected to touch US$32 billion in FY 2022-23. As per Commerce Ministry final data, this number is US$31.3 billion and at an 11.8 percent year-on-year growth in percentage terms.

This is around a US$3 million increase in Indian exports to the Gulf trade hub recorded April 2021-March 2022. Indian exports to UAE had previously 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

May 2022 – March 2023

During the CEPA implementation period (May 2022 – March 2023), India’s exports to the UAE grew to US$28.5 billion (May 2022 – March 2023) from US$26.2 billion a year ago (May 2021 to March 2022). This was an 8.5 percent year-on-year (YoY) growth.

India’s imports from the UAE grew to US$53.2 billion (an annual increase of 18.8 percent) during the period from April 2022 to March 2023. Non-oil imports during the same period grew by 4.1 percent.

June 2022 – February 2023

Between June 2022 and February 2023, Indian exports to the Emirates rose 10.4 percent 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.

Labor-intensive sectors were the key beneficiaries: mineral fuels; electrical machinery (particularly telephone equipment); gems & jewelry; automobiles (transport vehicles segment); essential oils/perfumes/cosmetics (beauty/skin care products); other machinery; cereals (rice); coffee/tea/spices; other agri products; and chemical products.

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.” 

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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.

The number of COOs issued under the CEPA increased from 415 in May 2022 to 8440 in March 2023. Over 54,000 COOs were issued under the CEPA during the 11-month (May 2022 – March 2023) period as per the latest update.

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.

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 this year, Indian exports worth US$1.3 billion are 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 grew to US$84.5 billion during April 2022 to March 2023, a 16 percent YoY growth over US$72.9 billion recorded during April 2021-March 2022. 

For a YoY comparison with the CEPA implementation period, it should be noted that bilateral trade increased from US$67.5 billion (May 2021-March 2022) to US$76.9 billion (May 2022-March 2023) – an annual increase of 14 percent.

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. x

Out of the 160 services subsectors, India has made market access commitments on 100 sub-sectors to the UAE and the UAE has offered 111 sub-sectors to India.

The two countries aim to hit US$100 billion worth bilateral trade (non-oil items) by 2030.

Also read: India-UAE Bilateral Trade: Trends and Outlook

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.

Dezan Shira & Associates maintain an office in Dubai and can assist with corporate registrations, tax advisory, employee visa applications, bank account opening and other ongoing business and trade compliance matters. Please contact Maria Kotova at dubai@dezshira.com for assistance.   

This article was originally published March 24, 2023. It was last updated May 1, 2023.

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