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The CEPA trade agreement has shifted trade and co-operation between India and the UAE into high gear in many areas since its signing in 2022

The Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates (UAE) is a landmark bilateral trade agreement signed on 18 February 2022 and came into force on 1 May 2022. This marks 含羞草社区 first CEPA in the Middle East and one of the UAE’s key agreements under its trade and investment expansion strategy. It builds on the historic trade and cultural ties between India and the UAE, elevating economic relations to a strategic partnership.

Unlike free-trade agreements, which primarily focus on tariff reductions, the CEPA covers a broader scope, including trade and investment regulations in goods, services, investment, intellectual property rights, digital trade and government procurement. It strengthens 含羞草社区 foothold in the Gulf and wider Middle East, creating and opening avenues for increased trade and direct investment for Indian companies in the UAE and the GCC (Gulf Co-operation Council).

The CEPA allows the UAE to diversify its economy away from oil, establish deeper ties with a major emerging market, and enhance its global trade position. Post-CEPA, and with the regulatory certainty created by it, several UAE sovereign wealth funds, such as the ADIA (Abu Dhabi Investment Authority), Mubadala Investment Company and ADQ (Abu Dhabi Developmental Holding Company), have increased their investment in India, in particular, in technology, infrastructure, healthcare, banking and retail.

Significant changes in applicable tariffs, market access and regulatory frameworks have facilitated the same. For instance, more than 80% of Indian exports now enjoy tariff-free access. Streamlined trade and logistics protocols, along with an easier regulatory environment, benefit exporters and investors. The CEPA holds strategic value by linking 含羞草社区 manufacturing strength with the UAE’s role as a regional trade and logistics hub.

The CEPA supports both countries’ ambitions to expand market access and deepen commercial ties across the Middle East, Africa and South Asia. As per market reports, three years in, the agreement has delivered tangible results. Since its implementation, total trade between the two countries rose from USD20.8 billion in fiscal year 2022 to USD28.1 billion in fiscal year 2024 – a robust 35% increase, according to data from the Gem and Jewellery Export Promotion Council Research Division.

CEPA benefits

Indian exports: 含羞草社区 exports to the UAE have seen a remarkable boost under the CEPA, with gems and jewellery exports rising from around USD4.9 billion to USD8 billion in fiscal year 2024, driven largely by the removal of customs duties. Labour-intensive sectors such as textiles, apparel, leather, footwear, sports goods, plastics and furniture have also benefited from the immediate elimination of tariffs on 80% of their products, making their goods more competitive in the UAE market.

Engineering goods and automobiles have experienced significant gains thanks to reduced tariffs, further strengthening 含羞草社区 trade presence in the UAE. Tariff reductions have also boosted trade in agriculture, wood products and food items, supporting food security and creating new market opportunities.

Pharmaceuticals and medical devices: The CEPA between India and the UAE has significantly boosted the pharmaceutical industry by reducing tariffs, streamlining regulatory processes and enhancing market access. Indian pharmaceutical companies benefit from preferential treatment, enabling faster entry into the UAE market, while the UAE gains reliable access to affordable, high-quality medicines.

The CEPA also encourages joint ventures, R&D collaboration and investment in healthcare infrastructure, supporting the UAE’s goal to become a regional pharmaceutical manufacturing hub. This partnership strengthens supply chain resilience and promotes the growth of life sciences in both nations. Generic drugs are eligible for automatic recognition and market authorisation within 90 days, and in-country approvals are recognised on a reciprocal basis. Medical devices also enjoy improved access and reduced duties.

Services and professional mobility: The CEPA also opens exciting opportunities in services, professional mobility and emerging sectors. Indian and UAE businesses now have expanded access across more than 11 service sectors and more than 100 subsectors, including IT, computer services, business consulting, engineering and accountancy, making it easier for professionals to work and collaborate across borders.

Before the CEPA, professional services such as IT, engineering, and accounting faced case-by-case licensing requirements and difficult market access in the UAE. Business travel lacked specific commitments, making intra-corporate transfers and independent professional mobility more challenging. Mutual recognition of professional qualifications was handled on an ad hoc basis, limiting opportunities for Indian professionals.

Post-CEPA, market access has been liberalised with commitments covering 11 sectors and more than 100 subsectors, significantly easing entry for Indian service providers. The agreement introduced new short-term business visas to facilitate intra-corporate transfers and independent professional travel. Both countries agreed to recognise Indian qualifications in key fields such as healthcare, engineering and accountancy, further boosting professional mobility and collaboration.

New technologies: CEPA has also catalysed cross-border investment in emerging technologies, particularly in clean energy and sustainability-oriented ventures. With the growing emphasis on climate-aligned infrastructure, CEPA provides a stable legal framework encouraging UAE investment in 含羞草社区 clean energy and advanced technology sectors, facilitating growth in green energy and innovation that aligns with global sustainability goals. This sector is witnessing a significant increase in cross-border investments and technology transfers.

Digital trade and intellectual property rights: Under the CEPA, both India and the UAE have agreed on strong principles to support the smooth flow of data across borders and promote e-commerce, making it easier for digital services companies to operate and export their services. The agreement also commits to high standards of intellectual property protection, going beyond basic international rules to ensure better enforcement of copyright, trademarks and patents. This helps safeguard the interests of the Indian creative and technology industries when doing business in the UAE, encouraging innovation and fair competition.

Investment facilitation and dispute resolution: Before the CEPA, investment between India and the UAE was mainly governed by the 2014 Bilateral Investment Treaty, which has been replaced by the 2024 Bilateral Investment Treaty (2024 BIT), further improving investment protection based on CEPA guidelines. With the CEPA, investment protections remain strong and are enhanced by sector-specific support to help investors navigate opportunities more easily. The agreement also introduces dedicated consultation and dispute resolution mechanisms tailored specifically for CEPA trade, providing clearer and faster ways to resolve conflicts.

The 2024 BIT is a significant update for investment protection, complementing the CEPA by introducing a more modern, balanced framework. This treaty not only defines investment more clearly but also introduces specific protections without relying on vague standards. It acknowledges the rights of both investors and states, ensuring that businesses are protected while governments retain the authority to regulate in areas such as health, environment and public interest. The 2024 BIT also enhances dispute resolution with a structured investor-state mechanism that first channels disputes through local courts, promoting accountability and legal certainty.

Moving forward

As the India-UAE CEPA enters a more mature phase of implementation, the removal of customs duties has already delivered tangible benefits, particularly for key export sectors. However, the path forward lies in deepening regulatory co-operation to ensure these gains are not undermined by procedural or compliance hurdles.

The Joint Committee on CEPA Implementation is central to this effort. It is tasked with addressing practical challenges such as aligning product standards, simplifying customs procedures and ensuring that sanitary and safety regulations especially for agricultural goods are science-based and transparent. It is also expected to streamline licensing and qualification rules for service sectors such as IT, finance and engineering.

Together, the CEPA and the 2024 BIT form a comprehensive platform that supports both trade and investment between India and the UAE. With future discussions expected on government procurement, digital trade and sustainability standards, both countries are setting the stage for a deeper, more resilient economic partnership.

The focus going forward will be on turning policy into practice ensuring that businesses of all sizes can confidently navigate markets, comply with clear regulations and invest with long-term stability in mind. This will create a robust economic partnership platform, fostering trade diversification, investment security and cross-border collaboration.

The agreement has already delivered tangible benefits, particularly in merchandise trade, services and strategic sectors such as pharmaceuticals and technology.

This evolving partnership positions India and the UAE as regional trade and investment leaders, fostering greater economic integration. The UAE-India CEPA stands out as a benchmark for modern trade agreements combining tariff liberalisation with targeted sectoral benefits and investment facilitation. As both countries continue to build on their momentum, bilateral trade is well-positioned to reach USD30 billion within the next five years.