India, UAE trade pact helps boost bilateral trade to cross $100 billion: Goyal
Bilateral merchandise trade between India and the UAE has crossed USD 100 billion, with the third Joint Committee meeting on the Comprehensive Economic Partn...
What Happened
- Bilateral merchandise trade between India and the UAE has crossed USD 100 billion, with the third Joint Committee meeting on the Comprehensive Economic Partnership Agreement (CEPA) noting that total trade (goods and services combined) reached USD 101.25 billion in 2025–26.
- India's exports to the UAE rose approximately 2% to USD 37.36 billion, while imports from the UAE grew 0.77% to USD 63.89 billion, reflecting a trade deficit of USD 26.53 billion.
- Services trade has also expanded steadily, with new markets opened across IT, logistics, and professional services.
- Both sides have set a new joint target of USD 200 billion in bilateral trade by 2032.
Static Topic Bridges
India-UAE Comprehensive Economic Partnership Agreement (CEPA)
India's CEPA with the UAE, signed on February 18, 2022 and in force since May 1, 2022, was a landmark in speed and scope — negotiated and concluded in just 88 days. It was India's first FTA concluded in over a decade and served as a template for subsequent trade deals.
- Covers 11,908 Indian tariff lines and 7,581 UAE tariff lines.
- Eliminates or substantially reduces tariffs on more than 80% of India's exports to the UAE and over 90% of UAE's exports to India.
- UAE offers zero-duty market access to Indian labour-intensive sectors: gems and jewellery, textiles, leather, footwear, sports goods, plastics, engineering products, pharmaceuticals, and automobiles.
- Services chapter covers 11 sectors and over 100 sub-sectors including IT, business consulting, engineering, accountancy, and real estate.
- CEPA was projected to raise bilateral goods trade to over USD 100 billion and services trade to over USD 15 billion within five years — a target achieved ahead of schedule.
Connection to this news: The crossing of the USD 100 billion goods-and-services threshold vindicates the CEPA's early-harvest design, which prioritised quick tariff elimination on high-volume export lines.
Comprehensive Economic Partnership Agreement vs Free Trade Agreement
A CEPA is a broader instrument than a conventional FTA. While FTAs primarily address tariff reduction on goods, CEPAs also include investment facilitation, services liberalisation, mutual recognition agreements, intellectual property rights, and regulatory cooperation.
- India has signed CEPAs with Japan (2011), South Korea (2010), and the UAE (2022).
- India uses "CEPA" terminology for agreements that include substantive services and investment chapters alongside goods trade.
- The WTO framework (particularly GATT Article XXIV and GATS Article V) permits preferential trade agreements provided they cover "substantially all trade" and do not raise barriers to third countries.
- India's FTA review process was overhauled after studies showed some earlier FTAs led to import surges — the UAE and UK agreements incorporated more safeguard provisions.
Connection to this news: The USD 100 billion trade figure validates India's renewed engagement with deep preferential trade architecture as a driver of export growth.
India's West Asia Trade Strategy
The UAE is India's second-largest trading partner (after the US) and the largest in West Asia. The strategic and economic relationship includes energy security, remittances from the Indian diaspora, and food security linkages.
- India's total diaspora in the UAE exceeds 3.5 million — the largest expatriate community in the UAE.
- Remittances from the UAE are among the top sources of India's total inward remittances (India is the world's largest remittance recipient).
- The UAE serves as a re-export hub for Indian goods to Africa and other Gulf markets.
- Trade deficit (USD 26.53 billion in 2025–26) is partly structural, driven by crude oil, gold, and petrochemical imports from the UAE.
Connection to this news: The milestone reinforces the UAE's centrality in India's "West Asia policy" and highlights the strategic value of CEPA as both an economic and diplomatic instrument.
Key Facts & Data
- India-UAE CEPA signed: February 18, 2022; in force: May 1, 2022
- Negotiations completed in: 88 days
- Bilateral goods + services trade 2025–26: USD 101.25 billion
- India's exports to UAE (2025–26): USD 37.36 billion (up ~2%)
- India's imports from UAE (2025–26): USD 63.89 billion (up ~0.77%)
- Trade deficit (2025–26): USD 26.53 billion
- New bilateral trade target: USD 200 billion by 2032
- CEPA tariff coverage: 80%+ of India's exports and 90%+ of UAE exports receive reduced/zero duty
- Third CEPA Joint Committee meeting reviewed implementation progress