New Delhi: 8 months free trade agreement with United Arab EmiratesIndia’s trade gap with the Gulf countries widened by more than $5 billion due to higher global oil prices and increased non-oil trade.
According to Ministry of Commerce data, India’s exports to the United Arab Emirates increased by 11% to $20.25 billion during the period, while imports increased by 24.4% to $36.23 billion. This created a trade gap of $15.98 billion, compared to a trade deficit of $10.89 billion in the same period last year.
India’s non-oil trade deficit more than doubled between May and December 2022 to about $2.2 billion from $1.01 billion the year before.of India-United Arab Emirates Comprehensive Economic Partnership Agreement (CEPA) It entered into force on May 1, 2022.
India’s non-oil shipments to the United Arab Emirates increased 2.59% to $15.03 billion, while non-oil shipments increased 10.03% to $17.23 billion in the May-December period became.
A Commerce Department official said CEPA use was “on the rise” and likely to increase further. Officials point to the increased use of free trade agreements by Indian exporters, and the issuance of Preferred Certificates of Origin (COO) under CEPA will increase to 415 certificates ($133.2 million) in May 2022. equivalent) to 6,111 in December 2022, worth $1.11 billion.
However, the surge in imports was driven mainly by shipments of high-value petroleum products and raw materials, while exports were driven by two major exports, such as gems and jewellery, electrical machinery and equipment, automobiles and grains, on which India earned tariffs. Guided by digit expansion. Free access under contract. Experts noted that it was a good start.
“Under CEPA, Indian exporters are accruing significant tariff benefits. This is a source of competitive advantage for Indian exports to the United Arab Emirates. Practical utilization started in June 2022. A dedicated effort has been made by the Department of Commerce to raise awareness to assist Indian exporters to take advantage of CEPA. , there are regular industry exchanges and ongoing end-to-end handholdings…” said a Department of Commerce official. He added that as the UAE is a transit hub, most Indian imports from the UAE are made under the framework of the World Trade Organization, and only a limited number of products that meet value-added criteria are subject to CEPA. He is sourced directly from the UAE.
The agreement, negotiated in a record 88 days, was signed on February 18. This is the first major free trade agreement signed by the United States. Government led by Narendra Modi It could benefit some $26 billion worth of Indian goods, which have been subject to 5% import tariffs from the UAE since coming to power in 2014.
Ajay Sahai, DG and CEO, Federation of Indian Export Organizations (FIEO), underscored that the growing trade deficit with the United Arab Emirates is mainly due to large imports of oil and polymers. “The value-added segments such as electronics, electricity, automobiles, machinery, gems and jewellery, have seen impressive growth in exports. Recently, we have seen strong growth in the apparel, textiles and leather footwear sectors. ” he said Sahai.
Crude oil imports jumped 60% to $20.12 billion from April to November, while polymer imports jumped 30% to $1.09 billion.
“The trade deficit is widening mainly due to rising oil prices. Last year prices were much cheaper. You can see that half of the crude LPG we import is re-exported to the UAE as a finished product.It is counterintuitive that the oil and gas trade can only flow in one direction.”UAE Ambassador to India Sanjay Sudhir said in a recent interview.
The deal immediately eliminated tariffs on 90% of value-based exports from India to the United Arab Emirates. This includes areas such as gems and jewellery, textiles, leather and engineered products.
Gems and jewelery exports to the United Arab Emirates increased 33% in May. It grew 18% from June to December to $3.38 billion. Exports of electrical machinery and equipment increased by 28% over the same period to $2.25 billion. During this period, exports of automobiles and grains increased by 35% and 39% respectively, while exports of machinery and electrical goods he increased by 17%.
Arpita Mukherjee, Professor, ICRIERsaid that countries with high tariffs, such as India, would see higher import bills when tariffs were reduced. It will be used as a hub, and exports may not be growing due to a slowdown in key export markets,” Mukherjee said.
