UAE expects trade with India to cross USD 100 bn in 2-3 years

Source: Economic Times, 11 October 2022

The UAE expects trade with India to cross USD 100 billion-mark over the next 2-3 years, boosted by the comprehensive economic partnership agreement. The Indo-UAE trade stood at USD 73 billion in FY22, which got a major fillip since the two nations signed the comprehensive economic partnership agreement (CEPA) on May 1, 2022.

Between FY21 and FY22, the overall trade rose 68 per cent to USD 73 billion, after declining for two years. But the trend has reversed since the signing of CEPA. 

The bilateral trade has increased markedly with total value of non-oil trade at USD 29.5 billion in first six months of 2022, growing 22 per cent over the same period in 2021.

Non-oil exports too rose 31 per cent with total value reaching USD 2.7 billion between May and June, junior foreign trade minister of the UAE, Thani Bin Ahmed Al Zeyoudi, told the Indo-UAE economic forum organized by industry lobby CII here. 

“Though we’ve set a five-year deadline to take the UAE-India bilateral trade to USD 100 billion from what it is now, going by the way trade has been growing since the signing of the CEPA, I am confident that we’ll achieve the target much earlier, say over the next two-three years,” Zeyoudi told PTI later during an interaction.

The minister said trade is still dominated by oil, which constitutes 62 per cent of the overall trade value and only 38 per cent are non-oil trade now. But he expressed hope that CEPA will change this over the years. 

The minister also said while non-oil trade balance is still in favour of India by a whisker, overall India has a trade deficit of USD 17 billion in FY22, led vastly by large oil imports. 

During the first half of 2022, bilateral non-oil trade grew 22 per cent to USD 29.5 billion, the minister said. 

The UAE minister also said, his country’s cumulative investments in India is over USD 20 billion, of which USD 14.4 billion are FDI, making the UAE the eighth largest FDI source for India. 

In April-June this year, FDI flows into the country from the UAE stood at USD 2.14 billion. Zeyoudi also said his country is open to invest in the now-stalled West Coast Refinery if India revives the 60-million tonne refinery involving over Rs 3 lakh crore investment.

Addressing another session at the same forum, joint secretary in the commerce ministry Srikar Reddy said, since the CEPA, overall exports from the country to the UAE rose 16 per cent to USD 10.46 billion from USD 9 billion between May and August, which is commendable given the decline in overall global trade during the period. 

Reddy also said exports under the CEPA have been outpacing the country’s overall exports by 5:1. On the other hand, non-oil exports to the UAE grew 14 per cent. 

Reddy said non-oil trade is still dominated by gems & jewellery which constitutes around a third of the total trade, which has grown by 33 per cent to USD 1.4 billion. 

Companies from the UAE that have invested in India are Mubadala, DP World, Sharaf Group, Lulu Group, Emaar Properties, RAK Ceramics.

Companies from India that have invested in the UAE are ONGC & PetroResources, Tata Motors, Larsen & Tourbo Middle East, Oberoi Group, Zuari Agro Chemicals, Essar Steel Manufacturing Company.

Oman’s trade minister visits India amid FTA buzz

Source: Economic Times, 11 May 2022

Days after India’s free trade agreement (FTA) with the UAE entered into force, a 48-member delegation from Oman, led by its commerce, industry & investment promotion minister, Qais bin Mohammed al Yousef, will be in India from May 11 to 14 to hold talks.

The visit comes amid reports Oman has been keen on an FTA between India and the members of the Gulf Cooperation Council (GCC). Interestingly, the GCC group had dithered on whether to seal an FTA with India a decade ago. However, talks for a possible FTA gained traction after India and the UAE signed an FTA in February, which came into force on May 1. The GCC comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

The Comprehensive Economic Partnership Agreement (CEPA) with the UAE is expected to serve as a template for the fast conclusion of any such deal with the GCC countries, according to sources. In fact, some of these GCC nations want to sign a pact at the earliest, they added.

According to the CEPA, the UAE will allow as many as 99% of Indian goods (in value term) at zero duty in five years from about 90% in the first year. Similarly, India would allow duty-free access to 80% of goods from the UAE now and it would go up to 90% in ten years.

During the visit, senior officials from both the sides would be participating in the 10th Session of the India-Oman Joint Commission Meeting (JCM), to be held on Wednesday. This will be co-chaired by commerce and industry minister Piyush Goyal and his counterpart from Oman.

In a separate statement, the commerce ministry said another delegation, led by Abdulla Bin Touq Al Marri, the UAE’s minister of economy, is also on a visit to India from Wednesday. During the trip, the delegation would meet Goyal to discuss bilateral trade and investment relations. India-Oman trade grew 82% on year in FY22 to hit $ 9.94 billion.

The visiting delegation from Oman includes senior government officials and business representatives from diverse areas spanning health, pharmaceuticals, mining, tourism, telecommunication, energy, shipping and real estate, according to an official statement here.

“The visit provides an excellent opportunity to renew and further strengthen the already close and dynamic economic ties between the two countries,” the ministry said in the statement.

India, Germany commit to reform WTO

Source: Economic Times, 03 May 2022

India and Germany on Monday committed to reforming the WTO with a view to strengthen its principles and functions as well as preserve the autonomy of the two-tier appellate body of the global trade organisation.

Both sides also expressed their strong support for the upcoming negotiations between the European Union and India on a Free Trade Agreement, an Investment Protection Agreement and an Agreement on Geographical Indications.

Further, they emphasised the enormous potential of such pacts for expanding bilateral trade and investment, according to a joint statement issued after the 6th India-Germany Inter-Governmental Consultations.

The meeting was held under the co-chairmanship of Prime Minister Narendra Modi and German Federal Chancellor Olaf Scholz.

Appreciating the continued adherence to and underlining the importance of rules-based, open, inclusive, free and fair trade, the two nations highlighted the importance of the WTO (World Trade Organisation) as the centre of the multilateral trading system and central pillar of integrating developing countries into the global trading system.

“Both governments committed to reforming the WTO with the objective of strengthening its principles and functions, especially, preserving the two-tier appellate body, along with the autonomy of the appellate body,” the joint statement said.

The appellate body is a standing body of seven persons that hears appeals from reports issued by panels in disputes brought by WTO members. Currently, the appellate body is unable to review appeals due to positions remaining vacant.

The term of the last sitting appellate body member expired on November 30, 2020.

According to the statement, the two sides aim to make supply chains more resilient, diversified, responsible, and sustainable.

In a tweet after the meeting, Modi said India committed to quick progress in free trade agreement negotiations with European Union.

“Both governments highlight the need to work together to ensure that supply chains can continue to bring economic benefits while upholding international environmental, labour and social standards,” the statement said.

In the field of taxation, both sides welcomed the agreement on the two-pillar-solution reached at the OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) in October 2021.

Both the governments also expressed their common understanding that the solution should be simple, the process will be inclusive and will contribute to the stabilisation of the international tax systems by establishing a fair level playing field for all businesses.

“Germany and India shared a willingness to support a swift and effective implementation of both pillars. India and Germany expressed their commitment to complete the protocol amending the double tax avoidance agreement quickly,” the statement said.

Futher, the two sides expressed their wish to further strengthen the start-up cooperation and in this context appreciate the ongoing cooperation between Start-up India and the German Accelerator (GA).

The two nations welcomed GA’s intention to further increase its support by offering an India Market Access programme from 2023 onwards and Start-up India’s proposal to develop a common engagement model in partnership with GA for enhanced support to both startup communities.

India and Germany have signed nine agreements. They pertain to green and sustainable development partnership, comprehensive migration and mobility partnership, and field of advanced training of corporate executives and junior executives from India, among others.

Finance Minister Nirmala Sitharaman meets EU delegation to discuss FTA, other issues

Source: Economic Times, 12 April 2022

Finance Minister Nirmala Sitharaman on Tuesday met an EU delegation led by Member of the European Parliament (MEP) Bernd Lange and discussed issues of mutual interests, including the India-EU trade pact. As two of the largest open market economies and pluralistic societies, India and the EU can work towards a partnership that promotes international rule-based order in the post-pandemic period, the finance ministry said in a tweet.

“Finance Minister Smt @nsitharaman and Mr @berndlange agreed that there is keenness to move ahead on India-EU negotiations with Bilateral Investment Treaty, Free Trade Agreement and Geographical Indications Agreement,” the ministry said in another tweet.

Both sides underlined that synergised cooperation between India and the EU can harness opportunities to deliver on strong global value chains with transparent, viable, inclusive and rules-based inter-linkages, it said.

There has not been much forward movement on the FTA with the EU.

The Bilateral Trade and Investment Agreement (BTIA) has been held up since May 2013 as both sides are yet to bridge substantial gaps on crucial issues.

Launched in June 2007, the negotiations for the proposed BTIA have witnessed many hurdles, with both sides having major differences on key issues like intellectual property rights, duty cut in automobiles and spirits, and a liberal visa regime.

The two sides have to iron out differences related to the movement of professionals. DP BAL

USIBC inducts three top executives to its India Advisory Council

Source: Economic Times, 09 March 2022

The US India Business Council (USIBC) has added three top executives to its India Advisory Council, a premier strategic body comprising a highly influential network of senior India-based executives and thought-leaders committed to growing trade and investment between America and India.

The executives are heads of India operations of 3M, Dell, J&J, and Microsoft.

Ramesh Ramadurai, the managing director of 3M India; Alok Ohrie from J&J, Sarthak Ranade from Dell India and Anant Maheshwari from Microsoft India, according to a statement from USIBC.

“We are very pleased to welcome Ramesh, Alok, Sarthak, and Anant to our India Advisory Council. As the newest members of this group, we expect Ramesh, Alok, Sarthak, and Anant will enable USIBC to raise to new heights its policy leadership in the life sciences, digital technology, and manufacturing sectors,” said Atul Keshap, president of USIBC.

Arundhati Bhattacharya, Chief Executive Officer and Chairperson, Salesforce India who has assumed the role of IAC Chair said, the council plays a strategic role in the way business and government engage.

“We are delighted to welcome these industry stalwarts to the India Advisory Council and look forward to an engaging and insightful future of nurturing business relationships,” Bhattacharya said.

Formed in 2017, The India Advisory Council serves as a premier strategic body for representatives of Indian companies and Indian affiliates of American companies—including CEOs, presidents, managing directors, and chairpersons—to collaborate on a forward-looking advocacy agenda in India.

Its members help lead USIBC engagements, meet with senior Indian and US government officials to offer advice, and influence USIBC policy and programme direction to ensure the organisation remains the cutting-edge platform for advancing the US-India relationship.

Representing all major sectors, the IAC bolsters USIBC’s mission to promote bilateral trade and investment between the US and India and spearheads coordinated advocacy for cross-cutting initiatives including global health, supply chain resiliency, and the energy transition, the statement said.

Foreign Trade Policy: New FTP to refrain from big-bang fiscal sops

Source: Financial Express, 18 February 2022

With most of the key schemes having already been announced, the next five-year foreign trade policy (FTP) is unlikely to roll out any big-bang programme involving substantial fiscal incentives for exporters this time, sources told FE. The government’s plan to replace the current law for special economic zones with a new one, to make such duty-free enclaves more attractive to investors, may also be announced separately. The new FTP is expected to come into effect from April 1, unless the validity of the existing one — already extended by two years in the wake of the pandemic — is granted further extension.

This will be a break from the past. The government had announced the Merchandise Export from India Scheme (MEIS) in 2015, when the current FTP was rolled out, by merging five different schemes and sharply raising budgetary allocation for it. It had allocated as much as Rs 39,097 crore for exporters under the MEIS for the pre-pandemic year (FY20). This scheme was replaced with the Remission of Duties and Taxes on Exported Products (RoDTEP) programme from January 2021.

Nevertheless, the commerce ministry may revamp the Service Exports from India Scheme (SEIS) to cover more businesses, especially MSMEs, or announce a new programme altogether in the FTP to replace it. Moreover, it will focus on easing the compliance burden of exporters, overhaul various registrations and licensing requirements and bring in a “new-age facilitation framework” to help drive up exports to $1 trillion by FY28 from $400 billion this fiscal, one of the sources said.

Already, the government has earmarked Rs 21,340 crore for tax remission schemes for exporters like RoDTEP and RoSCTL in the Budget for FY23. This has substantially reduced the scope for any new big programme, apart from the one for services exporters. As such, commerce & industry minister Piyush Goyal has repeated exhorted exporters to shun the crutches of subsidies and instead boost their competitiveness, which would be key to achieving sustainable export growth.

Since the FTP is being designed in the aftermath of the Covid-19 outbreak, it would lay stress on ensuring India’s greater integration with the global supply chain and reducing its elevated logistics costs. Moreover, the Atmanirbhar Bharat initiative will find a befitting expression in the policy, according to the sources. Already, the commerce ministry has set a target to bring down India’s elevated logistics costs — long blamed for eroding the competitiveness of exporters — by as much as five percentage points over the next five years from the current 13-14% of gross domestic product (GDP).

The new policy will come at a time when exports are seeking to take advantage of an industrial resurgence in advanced economies. Elevated international commodity prices and acceleration in domestic manufacturing due to production-linked incentive schemes, too, are expected to brighten export prospects. Still, for the lofty $1 trillion target to be realised, the government will have to address the usual structural issues, including high logistics costs, refund levies on inputs consumed in exports on time and firm up free trade agreements with key markets early, exporters have said. The FTP, along with other initiatives of the commerce and industry ministry, will set the stage for a “big leap in exports”, another source said.

Global trade hits record high of $28.5 trillion in 2021, but likely to be subdued in 2022

Source:  UNCTAD, 17 February 2022

UNCTAD’s Global Trade Update published on 17 February shows that in 2021, world trade in goods remained strong and trade in services finally returned to its pre-COVID-19 levels.

“Overall, the value of global trade reached a record level of $28.5 trillion in 2021,” the report says. That’s an increase of 25% on 2020 and 13% higher compared to 2019, before the COVID-19 pandemic struck.

While most global trade growth took hold during the first half of 2021, progress continued in the year’s second half.

After a relatively slow third quarter, trade growth picked up again in the fourth quarter, when trade in goods increased by almost $200 billion, achieving a new record of $5.8 trillion.

Meanwhile, trade in services rose by $50 billion to reach $1.6 trillion, just above pre-pandemic levels.

Greater trade growth in developing countries
The report shows that in the fourth quarter 2021, all major trading economies saw imports and exports rise well above pre-pandemic levels in 2019.

But trade in goods increased more strongly in the developing world than in developed countries.

Exports of developing countries were about 30% higher than during the same period in 2020, compared with 15% for wealthier nations.

The growth was higher in commodity-exporting regions, as commodity prices increased. Moreover, South-South trade growth was above the global average, with a 32% year-on-year increase.

Substantial trade growth in most sectors
Except transport equipment, all economic sectors saw a substantial year-over-year increase in the value of their trade during the final quarter of 2021.

“High fuel prices are behind the strong increase in the value of trade of the energy sector,” the report says, “Trade growth was also above average for metals and chemicals.”

As a result of the global shortage of semiconductors, trade growth in communication equipment, road vehicles and precision instruments was subdued.

Forecasts for 2022
The UNCTAD report indicates that trade growth will slow during the first quarter of 2022.

Positive growth rates are expected for both trade in goods and services, albeit only marginally, keeping trade values at levels similar to the last three months of 2021.

“The positive trend for international trade in 2021 was largely the result of increases in commodity prices, subsiding pandemic restrictions and a strong recovery in demand due to economic stimulus packages,” the report says.

“As these trends are likely to abate, international trade trends are expected to normalize during 2022.”

Factors set to shape 2022 world trade
Trade growth in 2022 is likely to be lower than expected, given the macroeconomic trends.

The International Monetary Fund has revised its world economic growth forecast downwards by 0.5 points, the report notes, considering persistent inflation in the United States and concerns related to China’s real estate sector.

It also points to ongoing logistic disruptions and rising energy prices, saying that “efforts to shorten supply chains and to diversify suppliers could affect global trade patterns during 2022.”

On trade flows, the report projects the trend of regionalization to increase because of various trade agreements and regional initiatives, as well as “increasing reliance of geographically closer suppliers.”

Moreover, trade patterns in 2022 are expected to reflect the increasing global demand for products that are environmentally sustainable.

The report also flags the record levels of global debt, warning that concerns over debt sustainability are likely to intensify due to mounting inflationary pressures.

“A significant tightening of financial conditions would heighten pressure on the most highly indebted governments, amplifying vulnerabilities and negatively affecting investments and international trade flows,” the report cautions.

Free Trade Agreement: India to finalise terms of FTA with Gulf Cooperation Council soon; talks with Canada in March

Source: Financial Express, 24 February 2022

Close on the heels of its free trade agreement (FTA) with the UAE, India has expedited the pace of talks with several partners, including other members of the Gulf Cooperation Council (GCC), Australia, the UK and Canada, to firm up a raft of “fair and balanced” trade deals and enable domestic exporters to take advantage of a rebound in global growth.

Official sources told FE that the country will likely get into a pact with the GCC nations in the next fiscal. Both the sides will finalise the terms of reference (ToR) in March. The comprehensive economic partnership agreement (CEPA) with the UAE will serve as a template for the fast conclusion of this deal. In fact, some of these nations want to sign a pact at the earliest. Interestingly, the GCC group had dithered on whether to seal an FTA with India a decade ago. It comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

Official sources told FE that sources said Canadian trade minister Mary Ng will likely visit India on March 11 to hold talks with commerce and industry minister Piyush Goyal and revive the FTA negotiations.

Goyal held talks, via video conference, with his Australian counterpart Dan Tehan again on Monday to “tie any loose ends” to an interim trade agreement that is at an advanced stage of fruition. This is to be followed up with a broader FTA with Australia. This would be the second deal to be signed by India, after its CEPA with the UAE, which was, in fact, New Delhi’s first shot at an FTA in over a decade.

Similarly, negotiations with the UK are progressing well, said one of the sources. India has also started talks with Israel for a trade pact.

The negotiations are a part of India’s broader strategy to sign “balanced” trade agreements with key economies and revamp existing pacts to boost trade. The move gained traction after New Delhi pulled out of the Beijing-dominated RCEP talks in November 2019.

FTAs are also central to India’s efforts to raise its merchandise exports to as much as $1 trillion by FY27, against just $292 billion in FY21 when the pandemic hit global supply chains. However, the country is on course to realise a record export target of $400 billion this fiscal, as global demand for merchandise improved dramatically.

The IMF last month forecast global trade volume to grow by a decent 6% in 2022. It rose 9.3% last year but that was driven primarily by a sharply contracted base (-8.3%) in the wake of the outbreak of pandemic in 2020.

India-UAE may ink trade pact on Friday

Source: Economic Times, 15 February 2022

India and the United Arab Emirates are likely to sign a bilateral Comprehensive Economic Partnership Agreement (CEPA) on Friday during a virtual meeting between the leaders of the two sides.

The trade agreement is India’s first such trade deal in the Gulf region and is likely to cover areas such as goods, services, rules of origin, government procurement and investment. The two sides began the first round of the negotiations on the CEPA in September last year.

“The CEPA could be signed later this week, most likely Friday,” said an official, who did not wish to be identified.

The UAE is India’s third-largest trading partner, with bilateral trade amounting to nearly $60 billion in 2019-20. It was India’s second-largest export destination after the United States, with an export value of about $29 billion.

In December last year, the UAE lifted a ban on import of eggs and other poultry products from India, conceding a long-standing demand.

The UAE is part of the Gulf Cooperation Council, with which India is in talks for a separate trade agreement.

India’s major exports to the UAE include petroleum products, gems and jewellery, minerals, cereals, sugar, fruit and vegetables, tea, meat, seafood, textiles, engineering and machinery products, and chemicals. India’s top imports include petroleum and petroleum products, precious metals and stones.

Australia’s trade minister Dan Tehan to visit India today for FTA talks

Source: Economic Times, 09 February 2022

Australia’s Minister for Trade, Tourism and Investment Dan Tehan will travel to India today to advance negotiations on a free trade agreement (FTA). He will meet commerce and industry minister Piyush Goyal during his visit.

The two sides have agreed to conclude a long-pending FTA called a comprehensive economic cooperation agreement (CECA) by the end of 2022.

“Goyal and I have been in regular contact over the Christmas/New Year period because we are both committed to concluding an interim free trade agreement,” Tehan was quoted in an official statement released by Canberra.

As per the statement, CECA is a “potential game-changer” in opening opportunities for both Australia and India and also an important piece of post-Covid economic recovery.

In FY21, India’s exports to Australia- comprising refined petroleum, medicaments, railway vehicles including hovertrains, pearls and gems, jewellery, and made-up textile articles- were $4.04 billion, while imports were $8.24 billion. Imports included coal, copper ores and concentrates, gold, vegetables, wool, fruits and nuts and lentils.

“A free trade agreement with India would be a boon for Australian businesses, farmers and workers, creating new jobs and opportunities with one of the world’s largest and fastest developing economies,” Tehan said.

The aim of the visit is also to
promote Australia as a premium destination for students and tourists, according to the statement.

“Australia and India are important trading partners, and we share a strong desire to further enhance our bilateral trade relationship,” Tehan was quoted saying.

Tehan will also sign a memorandum of understanding on behalf of the Australian government with the Indian government to promote further travel and tourism between the two countries.