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India set to ink free trade pact with UAE amid policy shift towards bilateral deals

Piyush Goyal, Commerce and Industry Minister holds talks to give shape to India-UAE trade agreement (Pic credit Twitter)

After about 10 years, India is set to ink a free trade agreement next year. All indications are that Prime Minister Narendra Modi will formalise the proposed India-UAE Comprehensive Economic Partnership Agreement (CEPA) during his upcoming visit to Dubai. Sources said that India is now aggressively looking at inking bilateral trade agreements instead of multilateral ones especially in the new world geo-economic order, the post Covid 19 phase that has prompted many countries to scout for alternative supply chains.

Commerce and industry Minister Piyush Goyal, who said that the pact will create jobs and economic opportunities for both, has been holding intensive talks with various stakeholders to give final shape to the agreement.  

For New Delhi, the thrust, sources said, will be a timely conclusion of the ongoing trade deal discussions. India is also looking at similar trade pacts with Bangladesh, European Union, and Australia among others. 

However, in the case of the proposed India-UAE trade pact, a few issues including one on the “rule of origin” need to be addressed for maximum benefit, one of them said.

“There is a fair chance that a larger chunk of goods from other countries get routed through Dubai into India once the trade agreement is in place..that is one area we need to look at, measures need to be put in place so that the ‘rule of origin’ norm is not diluted,” Ajay Sahai Director general, Federation of Indian Export Organisation told India Narrative.

In November last year, India exited the much hyped Regional Comprehensive Economic Partnership (RCEP).

Also read: Trade agreement with Bangladesh will boost economic activities: Piyush Goyal

In the past, India entered into several free trade agreements, including one with the ASEAN (Association of Southeast Asian Nations) block.

“The trade agreements signed earlier have not yielded the desired results, while signing these pacts, we need to ensure that the results are fruitful for both,” Gopal Krishna Agarwal, BJP’s spokesperson on economic affairs said.

While RCEP is set to kick off from next year, sources said that India too needs to expedite the proposed trade pacts at the earliest to be able to cash in on the new economic dynamics.

Though India has exited the pact, other member countries including China are keen that New Delhi joins the RCEP.

“We fully appreciate why India is unable to join the RCEP at this moment. But the door remains open, and we welcome India to do so when you are ready,” Singapore’s deputy prime minister Heng Swee Keat said earlier.