This blog shows you the significant export opportunities arising from the strengthened trade relationship between India and the UAE. It highlights how the Comprehensive Economic Partnership Agreement (CEPA) reduces trade barriers, making the UAE a more accessible and promising market for your goods and services.
Since establishing diplomatic relations in 1972, India and the United Arab Emirates (UAE) have continuously strengthened their economic ties. By the financial year 2022, the UAE had become India’s third-largest trading partner, with non-oil bilateral trade reaching US$72.87 billion. This robust partnership was further enhanced by the signing of the Comprehensive Economic Partnership Agreement (CEPA), which came into effect on May 1, 2022. The agreement is expected to boost annual non-oil bilateral trade to US$100 billion over the next five years.
Indian Prime Minister Narendra Modi highlighted the significance of this development, stating,
“Today, we are starting a new chapter in India-UAE relations with the signing of the Comprehensive Economic Partnership Agreement. This agreement will open up new avenues of trade and investment between our two countries.”
Similarly, Sheikh Mohamed bin Zayed Al Nahyan, President of the UAE, expressed,
“The CEPA with India reflects our commitment to strengthening our strategic partnership and driving sustainable economic growth for both nations.”
These remarks underscore the mutual commitment of both nations to deepen their economic collaboration and the anticipated positive impact of the CEPA on bilateral trade.
Trends in India-UAE bilateral trade
Since the 1950s, India’s trade relationship with the UAE has been accelerating, fueled by improved access to storage facilities and the oil boom—like a ship catching a strong tailwind. The emergence of Dubai in the 1990s as a key regional trading hub acted as a powerful engine propelling this partnership forward. After 2004, the trade between the two countries gained even more momentum, much like a river swelling after heavy rains, following the free trade agreement (FTA) between India and the Gulf countries.
As a result, the trade volume between India and the UAE experienced a significant surge, jumping from US$180 million in the 1970s to US$75.44 billion in FY 2013. In the subsequent years, there was a slight decline, with trade decreasing to US$49.88 billion in FY 2018. The COVID-19 pandemic in FY 2021 further negatively impacted trade flows due to supply chain disruptions, causing a drop to about US$42 billion. However, India-UAE bilateral trade made a strong recovery, bouncing back by 68.4% year-on-year to reach US$72.87 billion in FY 2022.
Key Facts:
1970s: Trade volume was US$180 million.
FY 2013: Increased to US$75.44 billion.
FY 2018: Slight slump to US$49.88 billion.
FY 2021: Fell to about US$42 billion due to the COVID-19 pandemic.
FY 2022: Rebounded by 68.4% to reach US$72.87 billion.
| India-UAE Trade Statistics (in US$ Billion) | ||||
| Year | Export from India to UAE | Import from UAE to India | Total bilateral trade between India and UAE | Trade balance |
|---|---|---|---|---|
| 1997-98 | 1.62 | 1.47 | 3.09 | 0.15 |
| 1998-99 | 1.86 | 1.72 | 3.58 | 0.14 |
| 1999-2000 | 2.08 | 2.00 | 4.08 | 0.08 |
| 2000-01 | 2.59 | 0.65 | 3.24 | 1.94 |
| 2001-02 | 2.49 | 0.91 | 3.4 | 1.58 |
| 2002-03 | 3.32 | 0.95 | 4.27 | 2.37 |
| 2003-04 | 5.12 | 2.05 | 7.17 | 3.07 |
| 2004-05 | 7.34 | 4.64 | 11.98 | 2.7 |
| 2005-06 | 8.59 | 4.34 | 12.93 | 4.25 |
| 2006-07 | 12.02 | 8.65 | 20.67 | 3.37 |
| 2007-08 | 15.63 | 13.48 | 29.11 | 2.15 |
| 2008-09 | 24.47 | 23.79 | 48.46 | 0.68 |
| 2009-10 | 23.97 | 19.49 | 43.46 | 4.48 |
| 2010-11 | 33.82 | 32.75 | 66.57 | 1.07 |
| 2011-12 | 35.92 | 36.75 | 72.67 | -0.83 |
| 2012-13 | 36.31 | 39.13 | 75.44 | -2.82 |
| 2013-14 | 30.52 | 29.01 | 59.53 | 1.51 |
| 2014-15 | 33.02 | 26.13 | 59.15 | 6.89 |
| 2015-16 | 30.31 | 19.44 | 49.75 | 10.87 |
| 2016-17 | 31.17 | 21.50 | 52.67 | 9.67 |
| 2017-18 | 28.14 | 21.73 | 49.88 | 6.41 |
| 2018-19 | 30.12 | 29.78 | 59.91 | 0.34 |
| 2019-20 | 28.85 | 30.25 | 59.11 | -1.40 |
| 2020-21 | 16.67 | 26.62 | 43.30 | -9.94 |
| 2021-22 | 28.04 | 44.83 | 72.87 | -16.78 |
*Data accessed from Department of Commerce on September 24, 2022
*Data accessed from Department of Commerce on September 24, 2022
*Data accessed from Department of Commerce on September 24, 2022
Notably, as total trade between India and the UAE has grown, the trade gap has also widened in favor of the UAE. In FY 2022, India’s trade deficit with the UAE reached a record high of US$16.78 billion.
What Do India and the UAE Trade With Each Other?
India sends a wide variety of goods to the UAE, such as petroleum products, gems and jewelry, food items, textiles, and engineering goods. Conversely, India’s imports from the UAE are mainly dominated by petroleum and petroleum products, gems and jewelry, chemicals, and related items.
According to UN Comtrade data from 2016 to 2021, India’s exports to the UAE were predominantly led by the gems and jewelry sector, which accounted for 34.4% of the total exports. The coal, oil, and gas sector followed with an 18% share. Other industries that held significant weight included textile articles, industrial goods, and products from the food and fast-moving consumer goods (FMCG) industry.
During that same period, coal, oil, and gas made up the largest share of India’s imports from the UAE, accounting for 46.2% of the total. Gems and jewelry followed at 33%, then industrial goods at 8.4%, and finally the metals and mining sector—including commodities like copper and aluminum.
| India-UAE Trade Basket: Major Items by Composition | |||
| India’s top exports to the UAE (2016-2021) | India’s top imports from the UAE (2016-2021) | ||
|---|---|---|---|
| Gems and jewelry (34.4%) | Natural pearls, semi-precious stones and metals |
Coal, oil and gas (46.2%) | Mineral fuels, oils and waxes |
| Coal, oil and gas (18%) | Mineral fuels, oils and waxes |
Gems and jewelry (33%) | Natural pearls, semi-precious stones and metals |
| Textile and apparel (5%) | Knitted apparel Non-knitted apparel Textile articles |
Industrial (8.4%) | Plastics Salt, sulphur, cement Mechanical goods |
| Industrial (8%) | Mechanical parts Organic chemicals Plastics |
Metal and mining (6.8%) | Copper Iron and steel Aluminum |
| Food and FMCG (7%) | Cereals Edible fruits and nuts Fish and marine products |
FMCG (2%) | Perfume Animals, vegetables, edible fats Fruits and nuts |
Which sectors are poised to gain the most from the implementation of the India-UAE CEPA?
The India-UAE CEPA aims to boost trade by eliminating tariffs. It is expected to increase annual bilateral non-oil trade to US$100 billion, and services trade to over US$15 billion within the next five years. The deal covers aluminum, copper, petrochemicals, pharmaceuticals, and agricultural products. It also includes provisions for services, investments, and intellectual property. The UAE has committed to granting 140,000 visas to highly skilled Indian workers by 2030. Additionally, the CEPA is projected to create one million jobs in India’s export industries, including textiles, handloom, gems and jewelry, and leather and footwear.
The trend suggests that the trade pact is positively influencing India’s export growth, even in the face of major global challenges. These challenges include the conflict in Ukraine, COVID-19 lockdowns in China, rising inflation, a slowdown in global growth, reduced demand, and a decline in global merchandise trade.
