Unpacking the India-UAE Trade Deal: A Closer Look at Import Concerns

Understanding the India-UAE Trade Deal

The India-UAE Comprehensive Economic Partnership Agreement (CEPA) is a landmark free trade agreement (FTA) that was officially implemented in May 2022. This agreement aims to enhance trade and investment between India and the United Arab Emirates (UAE) by systematically reducing tariffs and eliminating other trade barriers.

Concerns Over Import Surges

In recent times, India has expressed concerns regarding a noticeable increase in imports of specific products from the UAE. Notable among these are silver products, platinum alloys, and dry dates. The Indian authorities suspect that this surge might be attributed to the misuse of "rules of origin" norms outlined in the CEPA.

Decoding "Rules of Origin"

Rules of origin are essential criteria used to identify the national source of a product. Within the context of FTAs, these rules ensure that only products genuinely produced or substantially transformed in one of the partner countries benefit from preferential tariff rates.

India's Concerns with Misuse

India’s apprehension stems from the possibility that these imports may originate from third countries and are then routed through the UAE, exploiting the lower tariffs provided under the CEPA. This situation, known as "trade deflection" or circumvention, poses a threat to Indian industries and undermines the FTA's purpose.

Specific Concerns Raised by India

• Silver products and platinum alloys: India suspects that these items might be sourced from countries like China and re-exported from the UAE to benefit from reduced tariffs.
• Dry dates: There is a belief that dry dates from third countries are imported into the UAE and subsequently re-exported to India, misusing the CEPA's rules of origin.

India's Requests to the UAE

In light of these concerns, India has requested the UAE to:

• Verify compliance: Conduct stringent checks to ensure that imported goods meet the rules of origin criteria.
• Prevent circumvention: Implement measures to prevent the misuse of the CEPA for trade deflection.

The Significance of Addressing These Issues

Ensuring compliance with the rules of origin is vital for protecting Indian industries from unfair competition. It is also crucial for maintaining the integrity of the CEPA, ensuring its benefits are not exploited. Addressing these concerns is essential for sustaining healthy trade relations between India and the UAE.

In summary, India is vigilant about potential misuse of the India-UAE CEPA, particularly due to a rise in imports of certain products. India's suspicion that these imports may be rerouted from other countries to take advantage of lower tariffs raises significant concerns. The government is urging the UAE to verify compliance with rules of origin and take preventive measures against circumvention to safeguard fair trade and uphold the agreement's integrity.