Non-oil exports to UAE up 14% post FTA
The growth came in despite global macroeconomic headwinds, the government said
PremiumBENGALURU : Four months after the India- UAE comprehensive free trade agreement came into effect, India’s non-petroleum exports to the UAE grew by 14% year-on-year during in the June-August period, according to the department of commerce signifying positive impact of the pact of the bilateral trade.
The growth came in despite global macroeconomic headwinds, the government said.
India's exports to the UAE grew to US$ 5.92bn in the June to August period compared to $ 5.17 billion in the corresponding period last year. This compares to a 3% growth in India's global non-oil exports.
"This implies the growth rate of India’s non-petroleum exports to the UAE is almost 5 times as that of India’s non-petroleum exports to the world," the department of commerce said in a release on Sunday.
On the contrary, non-oil imports from the UAE during the same three-month period grew by 1% from US$ 5.56 billion to US$ 5.61 billion.
Electrical machinery exports to the UAE were up by 67% during this period at $916mn, compared to $549mn in the June-August period last year. Gems and jewellery exports grew by 33% to $ 1.4bn in the three-month period. Inorganic chemicals shipments to the UAE were up by 74% to $157 mn.
"It may be noted that India’s non-oil export growth of around 14% on year-on-year basis comes in the context of significant macroeconomic headwinds such as conflict in Ukraine, COVID-19 related lockdowns in China, rising inflationary pressures, expected Policy tightening in advanced economies, global growth slowdown and consequent reduced demand, and reduction in global merchandize trade (growth slowed down to 3.2% in Q1 2022 vis-a-vis 5.7% in Q4 2021) etc.," the government said.
WTO’s global trade growth forecast for the entire year 2022 was at 3% in April 2022. This forecast is expected to be revised downwards as the macroeconomic headwinds have worsened since April 2022.
"Indian exports are likely to increase further in the coming months with increasing use of the CEPA by the exporters and with dedicated efforts from Department of Commerce, in association with Indian Mission in the UAE, through organization of a series of trade promotion events in the UAE during the current Financial Year," said the release.
The India-UAE comprehensive economic partnership agreement (CEPA) which came into effect on 1 May immediately eliminated duties for 90% of India’s exports in value terms to the UAE covering sectors including gems and jewellery, textiles, leather, and engineering goods among others.
The analysis of the India-UAE CEPA was carried out from the period of June-August 2022, excluding statistics of oil trade. The month of May has not been included for the purpose of the analysis as it is considered as a transitory period, said the release.
"Oil trade has not been considered as import increase in oil/petroleum products is largely on account of the rise in global prices and to a certain extent on an increase offtake in volumes," it said. Further, it is pertinent to mention that bulk of the oil imports from the UAE are of Crude Petroleum, the demand for which is inelastic and the customs duty for which is very low, the government release added.
The pact, negotiated in record 88 days, was signed between the two sides on 18 February. It is the first major free trade pact signed by the Narendra Modi-led government since it came to power in 2014 and is likely to benefit about US$ 26 billion worth of Indian products that are subjected to 5% import duty by the UAE.
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