The Hindu Editorial Analysis- 14th February 2024 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

What About India’s Economic Ties with UAE?

• The India-UAE total trade merchandise has been valued at U.S.$52.76 billion for the first nine months of the fiscal year 2021-22, establishing the UAE as India’s third largest trading partner.
• The goal is to enhance bilateral merchandise trade to above U.S.$100 billion and services trade to U.S.$15 billion within five years.
• A trade agreement serves as a catalyst for two-way investment flows. The UAE’s investment in India is estimated at around U.S.$11.67 billion, ranking it as the ninth biggest investor in India.
• Many Indian companies have established manufacturing units either as joint ventures or in Special Economic Zones within the UAE, covering sectors such as cement, building materials, textiles, engineering products, and consumer electronics.
• Indian companies have also invested in sectors including tourism, hospitality, catering, health, retail, and education within the UAE.
• Under India’s revamped FTA strategy, the Government has prioritized at least six countries/regions for engagement. The UAE is at the top of the list for an early harvest deal (or Interim Trade Agreement), followed by the UK, the EU, Australia, Canada, Israel, and a group of countries in the Gulf Cooperation Council (GCC).
• Similarly, the UAE announced its intent to pursue bilateral economic agreements with India and seven other countries: U.K., Turkey, South Korea, Ethiopia, Indonesia, Israel, and Kenya.

What Can Be The Way Forward?

• Sustained Growth Momentum: India’s burgeoning exports coupled with a trade agreement with the UAE would bolster growth trajectory.
• Export Market Potential: With a significant upturn in manufacturing, the UAE presents an appealing market for Indian exports such as electronics, automobiles, and engineering products.
• Attractiveness for Investments: Both countries' aggressive pursuit of FTAs renders the UAE and India attractive markets not only for domestic firms but also for multinational corporations from other regions.
• Enhanced Relations with GCC: The UAE’s involvement in various regional and bilateral FTAs, particularly with GCC nations, facilitates stronger economic ties within the region.
• Access to Strategic Markets: India's agreement with the UAE opens doors to the African market through the UAE's strategic location, enabling easier access to trade partners, especially in sectors like handlooms, handicrafts, textiles, and pharmaceuticals.
• Addressing Non-Tariff Barriers: Compliance with UAE’s tariff structure, intertwined with the GCC, necessitates tackling Non-Tariff Barriers (NTBs), notably through Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) measures.
• Challenges for Indian Exporters: NTBs, predominantly SPS and TBT measures concerning items like live poultry, meat, processed food, fish, food additives, and electrical machinery, pose hurdles for Indian exporters.
• Need for Transparency: Efforts should be made within the FTA agreement to enhance transparency and predictability regarding the use of NTBs, thus easing compliance for exporters.