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Business News/ Economy / Start-ups and renewable energy sectors see surge in investments between India-UAE post CEPA: India’s ambassador to UAE

Start-ups and renewable energy sectors see surge in investments between India-UAE post CEPA: India’s ambassador to UAE

The pact, negotiated in record 88 days, was signed between the two sides on 18 February and came into effect on 1 May.

File image | Photo: MintPremium
File image | Photo: Mint

Non-traditional sectors like start-ups and renewable energy has seen a substantial surge in the two-way investments between India and the United Arab Emirates, led by strong investor confidence post the bilateral comprehensive free trade agreement signed last year, said India’s ambassador to the UAE Sunjay Sudhir at a business event in Dubai marking one year of the agreement.

He added that there has been an exponential rise in the number of certificates of origin being issued on both sides, indicating growth in utilization of the comprehensive economic partnership agreement (CEPA).

“CEPA is well beyond trade because it has given rise to confidence which has resulted in further investments. If you look at the last one year, you will see some so much more investment happening two ways…. Much of this investment has gone in non-traditional areas. Of course infrastructure has received a lot of investment. But a large chunk of this investment has gone into startups. It has gone into renewables, which were not really there on the drawing board say five years ago," said Sudhir at a business event marking a successful year of signing of CEPA. It was organised by the Federation of Indian Chambers of Commerce & Industry (FICCI) in association with Embassy of India, Abu Dhabi, Consulate General of India, Dubai and Dubai Chambers, which witnessed the participation of more than 200 leading businesses from India and the UAE. “As trade increases, more and more awareness increases, greater number of exporters on both sides will join in. I have heard that some companies have started exporting a lot of manufactured goods from the UAE to India, which they never used to do before CEPA," he added. Recently, Indian startups presented their pitches in Dubai to raise funds as part of the “India-UAE startup corridor".

ALSO READ: Non-oil exports to UAE increase 5%

The pact, negotiated in record 88 days, was signed between the two sides on 18 February and came into effect on 1 May.

The UAE Minister of State for Foreign Trade, Thani Al Zeyoudi spoke about the immense opportunities and advantages offered by CEPA. “We are still doing the analysis. The bilateral trade has surpassed $49 billion, surpassing the numbers of 2020 by 77%. We will do a full analysis by 1 May after the completion of one year of the full implementation of the agreement. The ultimate goal is to reach $100 billion within five years for non-oil trade between both nations and trade in services to $15 billion." He added that several significant partnerships have been launched since May 2022 related to energy, food security, education and healthcare. Advanced technology, renewable energy, real estate, food security among many others. Cepa reflects these ambitions. “All indications so far are positive," said Zeyoudi.

Data by the department of commerce show that in the October-December period, a total of 17005 certificates of origin worth $3.33bn were issued to Indian exporters as against $5.45bn worth of non-oil exports during the quarter, compared to 12875 COOs worth $1.31bn issued to exporters as against $5.83bn worth of non-oil exports, implying rising utilization of the pact.

A COO is issued to an Indian exporter, essentially certifies that goods in the consignment have met certain criteria to be considered as originating in India.

“If you look at the number of certificates of origin being issued on both sides, there has been an exponential rise. That means there is an interest, and so many so many people are using CEPA provisions…it has been a very smooth implementation of the pact. It has also charted new territory, which was not earlier included in India CEPAs like digital trade, pharma, so these are some very new elements, and it helps us also India as it is negotiating CEPA with other countries," said Sudhir. 

In December, 6111 COOs were issued worth 1.1bn, which is nearly three times the 2316 COOs worth $0.310 bn issued in June. The COOs issued in December were led by the textiles sector with certificates worth $303mn, followed by gems and jewellery at $185mn, edible fruits and nuts at $90.61mn, live animals at $88.09mn, automobiles at $38.79mn, and footwear at $36.34mn.

The COOs, which are mandatory to claim duty concessions under a free trade agreement (FTA) may translate into actual exports with a lag, and is a strong indicator of utilization of the pact. 

Sudhir added that CEPA is giving rise to new opportunities and unexplored avenues. “We’ve already seen an increase in startups. Cepa also talks about the digital world and a lot of start-ups are in the digital space. In the last several months there has been a huge influx of Indian start-ups into Abu Dhabi and Dubai," he said.

The pact, 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.

Gems and jewellery, electrical machinery, automobiles, cereals, and machinery and mechanical appliances are among the top gainers of CEPA in value terms, posting an export growth of 18%, 28%, 35%, 39%, and 17% respectively. The other high growth sectors include sugars and sugar confectionery, tea & spices, essential oils, miscellaneous chemicals, and man-made staple fibres at 70%, 49%, 43%, 43%, and 54% respectively.

India’s exports to the UAE grew by 16.45% in the April-December period to $23.3bn, and imports grew by 24% to $40.7bn during this period. 

The Dubai Chamber of Commerce reported that they registered 11,000 new Indian companies in 2022, bringing the total to more than 83,000.

Chandu Siroya, vice-chairman of Dubai Gold and Jewellery Group said that the company has added 100 shipments in the last nine months. “Total value stood at about Dh320 million approximately under CEPA, totalling about 2,028kg of gold. This is only jewellery. I see an ease of doing business now. Earlier, my customers from America would place the order with my suppliers and then come back. Now they don’t need to do that… It’s duty free so it doesn’t matter if they buy from here or from India," he said.

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Dilasha Seth
" Dilasha Seth is a journalist reporting on macroeconomic policy for the last 11 years. She writes extensively on issues including international trade, macroeconomic data, fiscal policy, and taxation. At Mint, she reports on trade deals that India is signing besides key policy decisions of the Ministry of Finance. She closely tracked and covered the transition to the goods and services tax (GST) regime in 2017 and also writes on direct tax-related issues. In the past, she has worked with Business Standard and The Economic Times. She is based in Bangalore."
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Published: 18 Feb 2023, 07:30 PM IST
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