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How strong logistics can be a key enabler in trade facilitation


The Comprehensive Economic Partnership Agreement (CEPA) has boosted trade flows between India and the United Arab Emirates (UAE) by nearly a third. The agreement has been significant since it was the first bilateral trade agreement between India and the UAE, as well as India’s first with a MENA (Middle East and North Africa) country.

The CEPA trade agreement provides a platform for SMEs to flourish

India has hailed its small businesses as the engines of its economic growth. The country is banking on them to fuel its ambition of becoming a 5 trillion-dollar economy. Yet, in order to remain resilient and even flourish in challenging times and fulfil their potential as stewards of India’s economic destiny, SMEs must first gain duty-free access to foreign markets and, secondly, be able to operate and move goods without disruption. This is where CEPA comes into play.By reducing 80% of tariffs on goods moving between India and the UAE and guaranteeing that all tariffs would be eliminated within ten years, CEPA gives SMEs in both countries easy access to businesses and customers within 11 service sectors and over 100 sub-sectors. These include key sectors such as healthcare, construction, education, transport, metals, processed food and more.

But the key to realising the full potential of the opportunity lies in establishing a seamless cross-border trade network, a dependable logistics partner, and an ecosystem that will empower SMEs to succeed.

Logistics infrastructure is essential for bilateral trade prosperity
The magnitude of the potential trade flows CEPA is set to unlock highlights the need for a strong logistics industry to push bilateral trade to the next level. Interestingly, the UAE is India’s third-largest trading partner and the second-largest export destination, accounting for 40% of its total trade with the Arab world.

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Trade in sectors such as gems and jewellery has seen exponential growth since the CEPA signing. It is anticipated that trade across the pharmaceuticals, medical devices, and automotive sectors will also substantially increase, leading to more investment in smart and specialised supply chain networks to meet the industries’ needs.Pharmaceuticals, for instance, require specialised services such as an end-to-end temperature-controlled supply chain to ensure the shipment’s integrity. Valuable goods like gems and jewellery will benefit from digitised processes for customs documentation to streamline lengthy or complex paperwork procedures. In this scenario, businesses that work with the right logistics provider have a competitive edge.

Logistics investment is fundamental to India and the UAE’s economies and is crucial for the import and exports’ success. The Indian logistics market is estimated to reach $380 billion by 2025, while the freight and logistics market in the UAE is predicted to generate more than $31 billion by 2026. India and the UAE’s logistics infrastructure, paired with free-trade policies, bi-lateral agreements, and growing investments and trade links, will have an enormous impact on trade between the two countries and the wider Gulf region. This, in turn, will result in a self-reliant and sustainable economy.

The writer is Vice President, Operations- India, FedEx Express.

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