INDIA-UAE TRADE TANGLE

New Delhi, 5 September A fter walking out of the Regional Comprehensive Economic Partnership (RCEP) agreement at the 11th hour of negotiations in 2019, India was seen as protectionist and averse to signing trade deals.

- SHREYA NANDI

To change this image, India signed a trade deal with the United Arab Emirates (UAE) in a record 88 days of negotiations in February 2022, which came into force in May that year.

However, just over two years later, India is seeking a review of some components of the Comprehensive Economic Partnership Agreement (CEPA) with the UAE.

Last month, Commerce Secretary Sunil Barthwal said that India wants to assess certain provisions of the India-UAE CEPA. The review will include addressing New Delhi's concerns regarding value addition norms amid a sharp spike in imports of precious metals, particularly silver.

Beyond the surge in imports of precious metals, India's first-ever commitment to government procurement and duty concessions on items such as petrochemicals in the trade deal with the UAE have put New Delhi in a difficult position while negotiating trade deals with other countries.

These issues raise the question of whether India made a mistake by finalising the CEPA rather hastily.

Spike in silver and gold imports

The size of India-UAE trade is significant, with the West Asian nation being India's third-largest trade partner. The value of bilateral trade stood at $22.8 billion during 2023-24 (FY24). The UAE is also India's second-largest export destination and third-largest import partner.

However, what came as a surprise was the way silver imports from the UAE surged. Even though overall imports from the UAE contracted by 9.8 per cent to $48 billion, silver imports saw a 5,853 per cent rise to $1.74 billion in FY24 from $29 million a year earlier. The rise was primarily due to the tariff concessions on precious metals agreed upon under the trade deal.