India, UAE to review progress under FTA

New Delhi: India and the UAE are set to hold the first joint trade committee meeting next week to assess the free trade agreement signed last year, a government official said. Both the countries are expected to release the utilization rate of the FTA that would give a clear picture of the benefit accrued by the deal.

While the commerce and industry ministry has said that significant duty benefits are accruing to Indian exporters under the Comprehensive Economic Partnership Agreement (CEPA), it is yet to reveal the crucial FTA utilization number due to a lack of data. Historically, India’s FTA utilization rate as per the Asian Development Bank, has remained under 25%, among the lowest in Asia.

The pact, which came into force on 1 May 2022, eliminated duties for 90% of India’s exports to the UAE by value and covered sectors such as gems and jewellery, textiles, leather and engineering goods. Gems and jewellery, electrical machinery, automobiles, cereals, and machinery and mechanical appliances have been the top gainers by value.

The commerce and industry ministry expects India’s exports to the UAE to touch a record $50 billion by 2026-27 from $31.8 billion in 2022-33 .

COO issuance to India surged to 8,440 in March from 6,944 in February, official data showed. A COO issued to an Indian exporter certifies that the goods have met certain criteria considered as originating in India.COOs, which are mandatory to claim duty concessions under free trade agreements (FTA), may reflect in actual exports with a lag, and are a strong indicator of the utilization of the pact.

As per a Deloitte report, the reason for low utilization of FTA in India can be attributed to various factors including low awareness about FTAs and Rules of Origin (RoO) in the Industry about the benefits under the trade agreement and poor participation of the industry in trade negotiations.

India’s exports to the UAE jumped 11.8% to $31.8 billion in 2022-23 compared to $28 billion in the same period of the previous year. The top export products were petroleum oil that surged 36% during the April 22 to March 23 period to $7,780.22 million against the year-ago period.