India and the UAE have signed a major new trade and investment pact that will eventually remove all tariffs on all goods from both nations.
The Comprehensive Economic Partnership Agreement (CEPA), as the pact is known, is expected to boost annual bilateral non-oil trade from $60 billion to $100 billion within the next three to five years.
The agreement will eliminate 80% of tariffs on UAE and India goods, while all tariffs are to be removed within 10 years, according to UAE Minister of State for Foreign Trade Thani Al Zeyoudi.
The agreement was signed virtually by senior officials from both nations on Friday.
It marks the first trade deal signed by the UAE since September 2020, as the Gulf nation looks to upgrade its status from a regional to global business hub.
UAE and India are already major trading partners. India is the second largest trading partner of the UAE, and every year the over 3 million Indians who work in the UAE send billions of dollars worth of remittances back to their home country.
The deal is expected to benefit UAE commodities such as aluminium, copper, and petrochemicals, which would benefit from the removal of tariffs.
The deal also covers services, investments, intellectual property, and a commitment by the UAE to grant 140,000 employment visas to highly skilled workers from India by 2030.
By 2030, the UAE Ministry of Economy predicts that CEPA will add $9 billion, or 1.7%, to UAE GDP.
Additionally, the ministry predicts that the deal will help exports increase by $7.6 billion (or 1.5%) and imports increase by $14.8 billion (or 3.8%).
CEPA is expected to take 1.5-2 years to be implemented. The UAE is also pursuing similar deals with South Korea and Turkey, and is finalising bilateral negotiations with Israel and Indonesia.