Robust bilateral trade witnessed post CEPA
Since CEPA’s operationalisation on May 1, 2022, India’s bilateral trade with the UAE has multiplied with non-oil trade increasing by 14% year-on-year (y-o-y) between June – August 2022. India is steadily making headway under the agreement, having achieved $88 billion worth of trade in FY24, testifying to its potential in realising the country’s vision of becoming a $5 trillion economy by 2027. This partnership will catalyse India’s dynamic investor ecosystem, prompting companies based in India and the UAE to seek business opportunities. This will inevitably stimulate export-oriented industries in India, expand India’s domestic manufacturing base, and enhance the global trade competitiveness of both economies. The agreement posits significant benefits for India’s vibrant MSME ecosystem, including labour-intensive MSME industries such as gems and jewellery, textiles, and handlooms, among others, and provides a real opportunity for their growth.
Since the implementation of CEPA last year, India and the UAE have progressively endeavoured to accelerate its operationalisation through enhanced engagement on bilateral forums, including the High-Level Joint Task Force on Investments, where both countries signalled their intent of establishing efficient and integrated Single Window Solutions and Virtual Trade Corridors to reduce costs and time for bilateral trade. Additionally, India’s support in setting up of a ‘Fast Track Mechanism’ will ensure speedy resolution of issues faced by UAE-based companies in India.
Logistics efficiency: key in sustaining the momentum
With the agreement already seeing remarkable momentum, infrastructure and logistics are the essential pillars on which future successes will be built. The Government of India has already introduced key initiatives under Gati Shakti, the National Infrastructure Pipeline, Bharatmala and Sagarmala that envisage a unified, consolidated and a multimodal logistics network. In addition, the strategic proximity of Mundra Port and Nhava Sheva Ports to ports like Jebel Ali, has opened unique opportunities for Indian logistics providers to explore new avenues that will induce capacity building around port infrastructure while simultaneously advancing the exporting capability of SME clusters in the region. The Delhi-Mumbai Industrial Corridor (DMIC), which is intended to seamlessly connect six states through a dedicated freight railway service, posits the prospect of a global export gateway, especially for labour intensive industries, including agri and food processing, textile, and gems and jewellery. Traversing the districts of Meerut, Muzaffarnagar, Saharanpur, and Ghaziabad, among others, that predominantly harvest wheat, barely, sugarcane and cotton, DMIC will exponentially increase exports of these to the UAE. Thus, CEPA will augment the UAE’s food security paradigm and its aim of being one of the prominent players in the regional food value chain.
CEPA: A defining lever for MSME exports
CEPA will help build a robust pipeline of growth, further advancing and modernising infrastructural connections within India’s vast regional hinterland, which will gradually embed cost-effectiveness across supply chains, attracting and deepening foreign investment linkages in the country. This will enhance India’s prominence among global production and manufacturing value chains and grant MSMEs and Indian manufacturers access to newer markets in Africa and Asia, where, for instance, there is high demand for high-quality agriculture products. This fits India’s strategic vision of being a globally competitive manufacturing giant and reflects global trends on building integrated and holistic supply chains between friendly nations.
The recently launched foreign trade policy (FTP), seeks to integrate India-made goods in global value chains, where MSMEs will be center-staged, especially through the creation of District Export Promotion Committees (DEPCs). Such intervention at a district level will prompt the identification of potential high-performing export products, ultimately giving these products access to bigger markets.
We hope that the milestone of CEPA’s first anniversary will further galvanise stakeholders from both countries to scale up their efforts to collaborate for accelerated implementation. Logistics service providers will play an essential role in enabling Indian businesses and MSMEs to leverage CEPA in a cost effective and productive manner.
As an example, the food security corridor proposed under the framework of the MoU between India’s Agricultural and Processed Food Products Export Development Authority (APEDA) and the UAE’s Al Dahra on the sidelines of CEPA, can benefit from the creation of an enhanced and integrated logistics network, to advance food exports from India to the UAE, and onwards.
As India aims to forge free trade agreements with other advanced economies, including the UK, and the Gulf Cooperation Council (GCC) region, it will be an opportune time for government and private players to accelerate merchandise trade and position the country as a trusted partner in the global supply chain.
The writer is CEO & MD Indian Subcontinent & Sub-Saharan Africa, DP World.
