India-UAE CEPA: Two Years On, Trade Surges Past $85 Billion Target

When Prime Minister Modi and UAE President Mohammed bin Zayed signed the CEPA in February 2022, economists were sceptical of its speed—88 days from announcement to implementation is extraordinarily fast for a trade agreement of this scope. The scepticism proved unfounded. Bilateral trade, which stood at $60 billion in 2021-22, crossed $83 billion in 2023-24, a 38% increase in two years. Goods exports from India to the UAE rose 19% to $34.5 billion, with gems and jewellery accounting for $9.6 billion, petroleum products $8.1 billion, engineering goods $4.2 billion, and textiles $2.8 billion. Indian imports from UAE—primarily crude oil, LPG, gold, and petrochemicals—reached $49.6 billion. The speed of implementation was possible because both sides had narrowed the scope: the agreement covers 80% of tariff lines for goods but defers detailed services commitments to annual reviews, a pragmatic compromise that delivered quick wins while leaving more contentious negotiations for later.

For India, the UAE is more than an export market—it is a financial and logistics hub connecting India to Africa, the broader Arab world, and global capital markets. Over 3.5 million Indians live in the UAE, sending home $20 billion in remittances annually, making the bilateral corridor the world's largest remittance route. Indian companies use Dubai's DIFC (Dubai International Financial Centre) as a base for Africa operations, and the CEPA has formalised arrangements for Indian rupee settlement in bilateral trade, reducing dollar dependency. UAE sovereign wealth funds—Abu Dhabi Investment Authority and Mubadala—have committed $75 billion to India across the National Infrastructure Pipeline, the National Investment and Infrastructure Fund, and direct investments in Reliance Industries, Adani Group, and technology startups. The Abu Dhabi-India digital payments corridor, launched under CEPA's digital trade chapter, allows instant transfers between UAE dirhams and Indian rupees—a significant fintech integration.

India's gems and jewellery exporters are the clearest beneficiaries: the UAE eliminated its 5% duty on Indian jewellery immediately, making Indian diamond-studded gold jewellery price-competitive against Turkish and Italian alternatives in the UAE retail market. The Gems & Jewellery Export Promotion Council reports a 22% increase in UAE-bound shipments post-CEPA. Indian pharmaceutical companies gained tariff-free access for 99% of drug formulations, and companies including Sun Pharma, Cipla, and Lupin have established distribution warehouses in Dubai to serve the broader Middle East market. UAE companies benefiting from CEPA's investment provisions include DP World, which has signed agreements for port development in six Indian states, and UAE telecom giant e&, which invested $400 million in Vodafone Idea as part of the deal's investment facilitation framework. Emirates airline's expansion of India routes—it now flies to 13 Indian cities with 280 weekly flights—reflects the CEPA's facilitation of services trade.

Despite goods trade successes, the CEPA's services chapter remains underdeveloped. India's IT and healthcare sectors have not seen the market access improvements they sought: UAE's licensing requirements for foreign professionals remain stringent, and Indian-trained doctors, engineers, and accountants still face lengthy recognition procedures before they can practice in the Emirates. The visa facilitation provisions—originally expected to streamline movement of service providers—have delivered only modest improvements. Digital trade commitments are similarly broad-brush: while the agreement encourages 'paperless trading,' concrete provisions on data localisation, cross-border data flows, and platform neutrality remain for future negotiation. These gaps matter because services are the fastest-growing component of bilateral trade and the area of India's strongest comparative advantage. The government has committed to addressing these gaps in the 2025 CEPA review, with proposals for a mutual recognition agreement covering educational and professional qualifications.

India's success with the UAE CEPA has accelerated negotiations with other Gulf Cooperation Council members. Bilateral CEPA talks with Oman are advanced, with a deal possible by late 2025. Negotiations with Saudi Arabia and Kuwait are at earlier stages but have gained momentum. The broader significance is India's emerging role as a trade deal architect in the Global South—demonstrating that deals with developing and emerging economies can deliver faster results than the decade-long negotiations typical with European and American partners. For the UAE, the CEPA has reinforced Dubai and Abu Dhabi's positioning as the commercial gateway between South Asia and the wider world. Indian FDI into the UAE—primarily in technology, logistics, and real estate—reached $5.7 billion in 2023, making India the fifth-largest source of investment in the Emirates, up from twelfth place before CEPA. The bilateral relationship has evolved from a simple trade corridor into a genuine strategic economic partnership.