India-UAE trade deficit widens by $5 bn post FTA

Eight months into a free trade agreement with the United Arab Emirates, India's trade gap with the Gulf nation has widened by more than $5 billion on a year-on-year basis, lifted by elevated global crude oil prices and increase in non-oil trade.

- Dilasha Seth

While India's exports to the UAE grew by 11% during this period to $20.25 billion, imports climbed 24.4% to $36.23 billion, data from the department of commerce showed. This caused a trade gap of $15.98 billion, compared to a deficit of $10.89 billion in the corresponding 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 a year earlier. The IndiaUAE comprehensive economic partnership agreement (CEPA) came into force on 1 May 2022.

India's non-oil outbound shipments to the UAE grew by 2.59% to $15.03 billion, while non-oil inbound shipments jumped 10.03% to $17.23 billion during the May-December period.

An official in the department of commerce said CEPA utilization is "on an uptrend" and is only likely to increase further. Pointing at the increasing utilization of the free trade pact by Indian exporters, the official said the issuance of preferential certificates of origin (COO) under the CEPA increased from 415 certificates worth $133.2 million in May 2022 to 6111 worth $1.11 billion in December 2022.