The India-UAE FTA: Strengthening Economic Ties Between Two Dynamic Countries

Anand Madia

OSD to Chief Minister, Maharashtra

Mumbai, 11th August 2023: The India-UAE FTA has the potential to greatly benefit the state of Maharashtra, which is the largest contributor to India’s GDP. The FTA, which went into effect on May 1, 2022, aims to increase bilateral trade between India and the UAE from $60 billion to $100 billion within the next five years.

In addition to increasing trade, the FTA will also facilitate increased investment flows between the two countries. UAE-based companies have already invested over $35 billion in India, with many of these investments coming to Maharashtra. This increased investment will bring new technologies and business practices to the state, boosting its economic development.

Bilateral Trade Between India and UAE

India and the UAE have strong economic ties, with the total value of the UAE’s non-oil trade with India reaching over $45 billion in 2021, representing a 60% increase from 2020 and an 8% increase from 2019. India is also the UAE’s top trading partner for non-oil exports, accounting for nearly 14% of the UAE’s total non-oil exports worldwide.

According to data from the Ministry’s Directorate General of Commercial Intelligence and Statistics, India’s exports to the UAE rose 17.6% to around $18 billion in the April-October fiscal year 22. Imports from the UAE during the same period increased by 33% to $32.3 billion. 

The FTA with the UAE has the potential to further boost Maharashtra’s economic growth by providing greater access to the UAE market for Maharashtra’s products and services.

● Elimination of tariffs on a wide range of goods and services: The FTA will eliminate tariffs on a wide range of goods and services traded between India and the UAE, which will make it easier and more cost-effective for Maharashtra’s businesses to export to the UAE. The FTA will eliminate tariffs on textiles, electronics, and engineering goods, which are major exports from Maharashtra to the UAE. This will make it easier for Maharashtra’s textile manufacturers and electronics and engineering firms to sell their products in the UAE, which is a significant market for Indian goods.

● Increased exports: The elimination of tariffs under the FTA is expected to lead to increased exports of Indian products, including those from Maharashtra, to the UAE. According to data from the Indian Department of Commerce, Maharashtra’s exports to the UAE increased by 23% in the first year after the implementation of the FTA. This includes exports of products such as textiles, electronics, and engineering goods, which are major sectors in Maharashtra.

● Greater foreign investment: The FTA will make it easier for UAE companies to do business in Maharashtra, which is expected to attract foreign investment to the state. UAE-based companies may be attracted to invest in Maharashtra’s manufacturing, services, and agriculture sectors, which could create new job opportunities and stimulate economic growth.

● Collaboration and exchange: The FTA will provide opportunities for collaboration and exchange between Indian and UAE companies, which can lead to the transfer of technology and knowledge. Indian and UAE companies may collaborate on research and development projects, or Indian firms may access advanced technologies developed by UAE companies. This can help Indian firms, including those in Maharashtra, to improve their products and services and stay competitive in the global market.

● Increased access to the UAE market for agricultural products: The FTA will provide greater access to the UAE market for Maharashtra’s agricultural products, a major market for Indian agricultural products. This can boost the state’s agriculture sector, which is a major contributor to the state’s economy. The FTA will eliminate tariffs on agricultural products such as grains, vegetables, and fruits, which are major exports from Maharashtra to the UAE. This will make it easier for Maharashtra’s farmers to sell their products in the UAE, which can increase their income and improve the viability of their farms.

The India-UAE Free Trade Agreement (FTA) has facilitated increased trade and investment between the two countries, particularly in sectors such as oil and gas, diamonds, precious stones and pearls, machinery and mechanical appliances, and textiles. It has also strengthened cultural and social ties, including increased travel and migration.

Overall, the India-UAE FTA has the potential to significantly boost the economy of Maharashtra through increased trade and investment with the UAE. It will also strengthen the already important partnership between the two countries and leverage their shared goal of using trade as a catalyst for economic growth and prosperity