NEW DELHI/DUBAI (Reuters) - India and the United Arab Emirates signed a broad trade and investment pact on Friday that will eventually cut all tariffs on each other’s goods and aims to increase annual trade between the two nations to $100 billion within five years.
The virtual signing ceremony marks the first trade deal sealed by the Persian Gulf state since it began pursuing such pacts last September in a bid to strengthen its status as a business hub.
Piyush Goyal, India’s commerce minister, told reporters the deal could create more than a million jobs for India in the next few years, particularly in labor intensive sectors such as the auto industry, plastics, leather and engineering.
Earlier, India’s Prime Minister Narendra Modi and UAE de facto ruler Sheikh Mohamed bin Zayed Al Nahyan witnessed the signing by senior officials from both nations, already major trade partners, during a virtual summit between the leaders.
“The agreement … not only deepens our economic and trading relationship with a close partner but unlocks a new phase of global cooperation for us,” Sheikh Mohamed said in a joint statement.
The Comprehensive Economic Partnership Agreement (CEPA), as it is known, is expected to boost annual bilateral non-oil trade from $60 billion to $100 billion within the next three to five years, India’s Prime Minister’s office said.
“There will be a huge flow of trade and investments between both nations and it’s going to open the door for more business opportunities,” Emirati Minister State for Foreign Trade Thani Al Zeyoudi told Reuters.
The CEPA is expected to be implemented by May after the UAE cabinet approval, Goyal said.
The agreement, which was not immediately made public, eliminates 80% of tariffs on UAE and India goods, while all tariffs are to be removed within ten years, Al Zeyoudi said.
UAE commodities like aluminum, copper and petrochemicals would benefit from the removal of tariffs, he said.