Gem and jewelery exports are driving the use of the India-UAE Free Trade Agreement to the fore

“We anticipate 50 percent utilization of the India-UAE Free Trade Agreement based on the COO issued. This needs to be backed up by UAE government data on actual Indian concessionary exports. There is a possibility that the actual occupancy rate may be slightly less than the COO issued, as some exporters who receive the certificates may not have exported. We’ll be providing the exact numbers soon,” said a source following the matter.

COOs are issued by governments to their exporters and certify that the exported products were manufactured in the country and comply with the rules of origin of the Free Trade Agreement. Based on the COOs, the partner countries allow the items at lower import tariffs agreed under the pact.

The Free Trade Agreement between India and the United Arab Emirates, officially called the Comprehensive Economic Partnership Agreement, was implemented in May 2022. Its usage rate is much higher than that of FTAs ​​with other partners like ASEAN, Japan and South Korea (which were under 20-25). The source explained that this is due to increased awareness among exporters this time around due to regular outreach programs and the immediate benefits the gems and jewelry sector received from the import tariff cut from 5 percent to zero.

Outreach programs help increase FTA use by making exporters aware of the formalities they need to complete in order to be eligible for FTA benefits, thereby increasing their confidence in opting for the benefits.

“As part of the free trade agreement between India and the United Arab Emirates, we have so far mainly come from the gemstone and jewelery sector. The immediate benefit of 5 percent tariffs is significant in value terms,” he said. The sector’s exports rose to US$5.77 billion in 2022-23, which was 17 percent more than exports worth US$4.95 billion in the previous fiscal year.

According to government sources, along with gemstones and jewellery, petroleum products, electrical machinery, mechanical equipment, automobiles and grains are the items that have benefited the most from CEPA.

India’s exports to the UAE grew 11.8 percent to US$31.3 billion in 2022-2023 compared to the previous fiscal year, more than double the 4.8 percent increase in exports to the rest of the world ( without VAE).

India’s imports from the United Arab Emirates increased by 18.8 percent to US$53.2 billion in 2022-23. Non-oil imports from the UAE rose less than 4.1 percent in the fiscal year.

“Utilization of the India-UAE Free Trade Agreement by Indian exporters is expected to increase in the coming years as broader tariff concessions are introduced in a number of areas,” the source said.

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