‘UAE and India discuss rupee non-oil trade’

Subject : International Relations

Section : Relations with other nations

Concept :

The United Arab Emirates and India have held discussions to trade non-oil commodities in Indian rupees.
The A.E. had signed a broad ranging Free Trade Agreement (FTA) with India, and India along with China, is among the biggest trade partners for Gulf Arab oil and gas producers but most of the currencies of Gulf countries are pegged to the U.S. dollar.
A significant proportion of Gulf trade is conducted in U.S. dollars but countries like India and China are seeking to trade in local currencies for various reasons such as lowering transaction costs.

India-UAE Comprehensive Economic Partnership Agreement (CEPA)

The UAE’s trade deal with India, against the backdrop of the World Economic Forum in Davos, aims to increase bilateral non-oil trade to $100 billion in the next five years.
India-UAE Comprehensive Economic Partnership Agreement (CEPA) was signed on 18th February 2022, during the India-UAE Virtual Summit.
The Agreement entered into force on 1st May 2022.
CEPA provides for an institutional mechanism to encourage and improve trade between the two countries.
As per the CEPA signed between India and the UAE:
90% of India’s exports will have duty-free access to the Emirates.
It covers goods, services and digital trade.

What is CEPA?

It is a kind of free trade pact which covers negotiation on the trade in services and investment, and other areas of economic partnership.
It may even consider negotiation on areas such as trade facilitation and customs cooperation, competition, and Intellectual Property Rights.
Partnership agreements or cooperation agreements are more comprehensive than Free Trade Agreements.
CEPA also looks into the regulatory aspect of trade and encompasses an agreement covering the regulatory issues.