India-UAE Comprehensive Economic Partnership Agreement: Dairy Excluded from FTA

Details of the Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates show that New Delhi, which taxes imports of beef and chicken at 30%, will reduce the duty to 27% over the course of the first year of the FTA, followed by a gradual reduction of 300 basis points each year until it reaches 15%.

India has kept sensitive dairy products out of the scope of its free trade agreement (FTA) with the United Arab Emirates and has pledged to gradually reduce tariffs on some key agricultural and food products, mainly meat, in order to protect the interests of national actors.

Details of the Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates show that New Delhi, which taxes imports of beef and chicken at 30%, will reduce the duty to 27% over the course of the first year of the FTA, followed by a gradual reduction of 300 basis points each year until it reaches 15%.

Buffalo meat alone contributed about $2.8 billion to India’s agricultural export prize pool till January this fiscal year. Of course, in some other meat segments where it’s not a big player, duties will be abolished immediately.

A wide range of dairy products, including milk, yogurt, butter, ghee and cheese, which are typically subject to duties of 30-60%, are excluded from the scope of the agreement. The fact that New Delhi did not grant a concession to the United Arab Emirates, which is not a major dairy player (unlike Australia), suggests the sensitivity it attaches to the dairy sector which was at the forefront. guard of opposition to a deal with the Beijing-dominated company. RCEP Partners.

The details were unveiled on Sunday by Trade and Industry Minister Piyush Goyal in Dubai. New Delhi signed CEPA – its first FTA with an economy in a decade – with the United Arab Emirates in February and it will come into force on May 1.

Interestingly, India will remove a 20% UAE tariff on gold jewelry, subject to a quantitative cap of 2.5 tons per year in five years. This could help several Indian companies like Kalyan Jewelers and Malabar Gold & Diamonds that have operations in the UAE source from there.

The two parties have also agreed on a separate Pharmaceuticals Document to facilitate better access to Indian products, including automatic registration and marketing clearance, within 90 days for multiple items meeting criteria. specified.
According to the pact, the UAE will allow up to 99% of Indian goods (by value) at zero duty in five years, up from around 90% in the first year.

Similarly, India would now allow duty-free access to 80% of goods from the United Arab Emirates and it would increase to 90% in ten years.
The UAE is India’s second largest merchandise export destination and two-way trade (goods and services) reached $60 billion in the pre-pandemic year of FY20. Thanks to CEPA, the two parties aim to increase bilateral trade (in goods and services) to $100 billion in five years.

New Delhi has also kept certain sensitive sectors and products, including most of those covered by production-related incentive programs, out of the scope of the FTA. These products include fruits, vegetables, cereals, tea, coffee, sugar, food preparations, tobacco, petroleum waxes, coke, dyes, soaps, natural rubber, tires, shoes, processed marbles, toys, plastics, aluminum and copper scrap, medical products, appliances, TV pictures, car and automobile components.

Indian jewelery exporters will enjoy duty-free access to the United Arab Emirates, which currently imposes a 5% tariff on such products. This will significantly increase its jewelry exports.

Regarding trade in services, New Delhi has offered market access to Abu Dhabi in around 100 sub-sectors, while Indian service providers will have access to 111 sub-sectors encompassing 11 major service sectors. These are business services, communication services, construction and related engineering services, distribution services, educational services, environmental services, financial services, health and social services, tourism and travel related services, recreational, cultural and sporting services and transport services.

However, the UAE has kept energy and energy-related services out of the scope of its commitments.

Interestingly, for the first time, India has included a digital trade chapter in the FTA, unlike those signed in the past. This suggests that India is willing to discuss prospects in these emerging areas bilaterally.