As formal negotiations for the India-UAE Comprehensive Economic Partnership Agreement (CEPA) kicked off on Thursday, the UAE’s Foreign Trade Minister Thani bin Ahmed Al Zeyoudi said the pact was a natural extension of traditionally strong bilateral ties, and exuded confidence about meeting the March 2022 deadline for the CEPA.
“Our relation is beyond the timeline and those agreements. The agreements for us are formalities, a showcase to the whole world,” he told The Hindu .
The pact with India is among the first of several that United Arab Emirates (UAE) is exploring, as it completes 50 years and makes a bid to reorient its economic future. The UAE is pursuing similar trade and economic partnership deals with countries such as the U.K., Turkey, Kenya and South Korea, he said . The high-level joint task force on investments, which will meet next week, had already managed to sort out many barriers, he said.
The UAE is hopeful that the CEPA, combined with easier investment flows, will enable the two countries’ businesses to tap global opportunities together, given their synergies and complementarities in different sectors. “We want to be part of the 1 trillion dollar exports target that India’s Commerce Ministry has set,” the Minister said.
Excerpts from the interview:
Before we discuss the CEPA, could you give an overview of UAE’s overall trade engagements with the world, and the strategic partnerships as well as trade pacts it is pursuing?
The UAE is well known as a trade hub for the region, and we have managed to transform these trade capabilities and skills to build more advanced, state of the art infrastructure in roads, ports, airports, logistics and supply chain infrastructure like warehouses and storages. We are now moving into e-commerce and digital trade. Going forward, as foreign trade is a key element of our economic growth, one of the main things we are working on is economic partnership agreements that we are launching now with the world. We chose a few countries that we can begin with in the first phase – India is the main and the first country that we start with, and yesterday, I met the Commerce and Industry Minister Piyush Goyal for the CEPA. For us, India and the region, UK, Turkey, South Korea, Kenya are countries with which we have strong trade relations with those countries and bilateral trade volumes of 260 billion dirhams, that we aim to double in the next five years. We are looking forward to these engagements with India and I am sure it will be very fruitful for both the nations and the whole region.
Last week, the UAE launched the “Projects of the 50” programme to ring in a new phase of growth? Could you tell us a little about it and how India fits into that vision?
As a preparation for the celebration of our 50 anniversary, we started the initiatives and projects that will drive our upcoming economic directions for the country. Foreign trade is getting most of the attention from those initiatives. The agreement with India is also a part of it. We are targeting 10 countries for our ten sectors. I am sure this is going to match with the interests of Indian and UAE businesses, and we can work together to explore third country markets together and expand our foreign trade. Enhancing the role of small and medium enterprises (SMEs) and micro-SMEs, encouraging many unicorns in the coming years, just like India… there are so many similarities in the work we are doing. The residency system is being revamped as well, sending a strong message to the Indian community. We have around 3.5 million Indians in the UAE who call it home, so we would like to make sure that the residence system is suitable. At the same time, we have launched a few other initiatives, bringing all systems into one window to make it easier to get the information investors want, similar to the system launched in India yesterday. So I see so many similarities… we can work together on many things.
Gems and jewellery and petroleum products are the traditional mainstay of the India-UAE trade relationship. What are the new sectors of interest that UAE would like to trade more freely with India, in both the export and import basket?
We have seen a reduction of the dependence on those two sectors in the trade between the two nations lately. The diversification has already been happening in the other sectors. The bilateral non-oil trade is $40 billion and we are aiming to take it to $100 billion after the finalisation and signing of the CEPA. For us, as the ninth largest investor in India, we want to make more investments come towards India in the targeted promising sectors. Sectors we would talk about in the CEPA are Services, sea transport, power, infrastructure, real estate, healthcare and telecom, but when it comes to our trade, we are talking about food security, health equipment and care, technological and industrial equipment for which we are sure going to be a natural partner to India, and vice versa. The same thing applies with petroleum, precious metals, minerals, chemicals, where we are complementing each other. We want to be part of the one trillion dollars target for exports that the (Indian) Commerce ministry has set. in the foreign trade.
Apart from closer trade ties under the forthcoming economic partnership agreement, what’s on the anvil for investments? Both countries have been investing significantly in each other’s market…
Investments are going to complement, for sure, the CEPA negotiations with our finance ministries’ discussing these issues and the high-level joint committee on investments which will meet next week. So, whatever is discussed this week will continue at that forum next week. The investment ecosystem in India is still attractive for our sovereign wealth fund and private players. We would also like to make our ecosystem as attractive and easily accessible to the Indian businesspeople. Our FDI into India so far had reached $18 billion last year and we are going to continue to explore that as well, along with our sovereign wealth fund’s plan to invest more in India.
You just met the Finance Minister Nirmala Sitharaman today. What were the key areas of discussion?
We would like to explore the financial system you have here, including the various bond markets, financial institutions… That’s one experience we want to see and check how to link it with our own systems. We discussed the futuristic fintech sector’s potential and how we can complement each other. The financial services sector has grown dramatically and was one of the growing sectors during the pandemic and the lockdown.
We also discussed cryptocurrencies and how we can start the preparatory work for the currencies of the future. There will be a task force just for these topics to make sure we take it to the next level. The task force will look at fintech and those business opportunities and how can we share those experiences on a larger scale, how can we apply some of the practices you guys are deploying in India and do it in UAE and vice versa, and how can we capitalise on the regulatory system and their expansion not only in India and UAE but also cover a wider area within our region – exploring Africa, CIS countries and South Asia.
We have also invited Her excellency, the Finance Minister (Ms Sitharaman), as well as India’s business community to come and explore the ICT technologies on display at the Dubai Expo for the coming six months.
How confident are both sides of meeting the March 2022 timeline as that gives just six months or so to work out the details and ratify the pact?
Our relation is beyond the timeline and those agreements. The agreements for us are formalities, a showcase to the whole world. During the early stages of the pandemic, we had the full support of the Indian govt, some of the healthcare expertise and medicines to support the UAE. During the second wave here, we sent a lot of our oxygen supplies and ventilators to the Indian communities. So our relations are beyond agreements. Yes, many are saying six months is a tough target. But for us, it is a natural extension of our strategic relations, and I am really confident that we will meet those deadlines.
What sort of duty concessions are likely to be pitched for the CEPA?
It is going to be discussed now. What we have learnt over the last few months, with the high-level task joint force on investments chaired by His Highness Sheikh Hamed bin Zayed Al Nahyan, Member of the Abu Dhabi Executive Council, and Indian Minister Piyush Goyal, is that they have managed to sort out so many barriers to investments. I am sure the CEPA is just going to be a continuation of this spirit of working together, opening up and even going beyond those barriers. Barriers are headaches in our way, of course, but our relationship goes beyond trade barriers.
One last thing we are trying to work out now is that we are going to be very specific in our investments. The conventional sectors are going to be transformed and evolved with this relation, but we would like to ensure that we are focusing on those sectors like Agri-tech, Artificial Intelligence, healthcare, pharma and renewables, these are the futuristic sectors that will bring more value to our relationship. We want to bring those sectors up so we can add more value to the whole region. The agreement is just another method to boost this traditionally strong strategic relationship.
