, UAE’s Minister of Economy tells ToI in an exclusive interview how the newly implemented Comprehensive Economic Partnership Agreement (CEPA) between India and UAE will lead to a $100 billion trade between the two countries in non-oil sector and create almost 250,000 jobs over next few years. Leading a delegation of prominent representatives of government and private sector to India to explain the benefits of agreement to Indian businesses and explore joint investments, Abdulla says India and UAE will be the defining trade partnership of the future.
From signing it in February to implementing it in May, India UAE have been very focussed on CEPA. What makes you believe this agreement is a game changer for the trade between two countries?
UAE and India have been strong trading partners even before CEPA. Trade between two countries was about $4 billion in 2003-04 that grew to $41 billion in 20-21. This will reach $100 billion in the next 6-7 years through CEPA. The agreement has 18 chapters and 11 annexures that are all public and companies are already reading and putting opportunities to it. We saw a lot of opportunities come up. This agreement was drafted and implemented in quick time. At every stage of drafting, businesses were regularly consulted on their demands and interests.
The agreement has been accorded high priority by both the countries as you have a high-profile delegation within days of it being implemented.
We have a delegation here of private and government sectors. It was vital for us to explain it clearly to the businesses. So, we decided that we will come with a delegation once CEPA is in force. It shows a clear vision that UAE and India want this implemented quickly and bring opportunities of investments. We cannot wait as due to Covid, pandemic situations there have disruptions. There is inflation and global supply chain disruption and all that is happening around, it is important for us to bring businesses together to find new opportunities at the earliest. I was speaking with minister Piyush Goyal that our job as government to government fast implementation is done. It is now the job of businesses to bring more opportunities and investments.
What are some of the key highlights of this agreement?
I see six major aspects of CEPA.
Agility – there are some chapters that have a door of future amendments such as digital economy and trade. That is forever changing. There is space of discussion. An agreement stays in force for many years but to have scope of fast change to cater to evolving demands is extremely important today.
This agreement is extremely beneficial for small and medium enterprises. It allows them to use it and boost their standing and scale up. There is no dearth of opportunities for small businesses from both countries. UAE and India SMEs can scale in each other’s markets.
Intellectual property protection has been announced. We wanted this agreement to be truly comprehensive and covered such important aspects of trade as well. The intellectual property protection will boost investment and trade between the two countries.
Government procurement as a chapter in this agreement is very important as that has not been seen in trade agreements or economic agreements before. To have sovereign companies be a part of procurement in both nations is something we see as vital and important.
Investment chapter brings in so much information and that will push investments in both nations.
Digital economy and digital trade as a new chapter that come into this agreement to allow understanding that digital trade and economy is vital and that need to grow and prosper.
UAE is now focussed on emerging as a lucrative start-up destination. What are some special provisions for tech talent from India?
We are now looking to have more sessions between UAE and India, especially in the start-up domain. We will be seeing that in the near future to bring companies together to seek opportunities of investments and trade. We are seriously looking at the economic aspect. We already have a UAE digital economy strategy in place a month ago. We have a minister of state for the digital economy. We have visa regimes such as freelance visas that allow people to work in such fields.
Do you see UAE as a start-up hub in near future for Indian tech companies?
We see the UAE as a scale up hub. We are a scale up nation. We are ideal for start-ups to engage and expand. There are hundreds of examples of companies now that started in India but scaled up in the UAE by using it as a gateway to the world. Businesses now understand clearly that the UAE has one of the strongest and most capable logistics and supply chains. We have the biggest airports and seaports that allow trade to happen. Our visionary leaders enabled us in the position of strength by building a strong infrastructure for over 50 years.
This agreement stresses on diversifying to and strengthening the non-oil economy. What is UAE’s vision on that?
We are looking at diversifying our economy. We are 70 percent non-oil and 30 percent oil in GDP. In the non-oil sector, we have recorded 5.3 percent growth which is very high growth for non-oil GDPs. We are already beyond our 2019 figures. Diversification in new economies, non-fossil energy investments, cleaner energy focus, hydrogen energy push are being actively done. We are hosting COP28, the biggest climate change conference in 2023. We are at the forefront of discussions on challenges of climate change.
How does CEPA diversify India UAE trade?
India UAE trade at the moment is dominated by gold and other products. But we know trade today needs diversification from the present economy to newer economies. We need to be aware of the challenges of the traditional economy and regularly invest into the new economy. CEPA is an open book for businesses to come together and look into a future to diversify. Pandemic taught us diversification is important.
What are the major benefits you see immediately from this agreement?
CEPA will create 200-250k jobs. For these many jobs to be created from one agreement alone is huge. That’s the modelling we have done. On the revenue growth, if we say at present, we are $45 billion and we need to reach $100 billion, we are looking at $10-15 billion growth a year target. That in itself is a very impressive growth. It is time to market the CEPA and explain it. That is the agenda of this trip and delegation to bring business to business closer.
We announced over a thousand commodities that are exempted or have reduced tariffs. Businesses need to look at the website, see what is the percentage of reduction and come up with a business model to benefit from the agreement and drive investments. Businesses are looking at many opportunities for the benefit of their industry.
How big is the knowledge and service economy for you?
Knowledge and service are huge chapters. We are focussing on tech, hospitality, health care services and so forth. The UAE as an economy is heavily based on the service economy. CEPA benefits both the country’s service sectors. Through the government procurement chapter for example we can benefit the service sector as well such as getting the best of health care providers.
CEPA also lays emphasis on new visa regimes to attract talent. How has that been so far?
UAE introduced golden, green and freelance visa regimes to allow talent to move across to explore and scout opportunities. These are vital for businesses to flourish. Any trade or agreement has to have a very strong attraction of talent. Availability of talent is important for investments to happen. Talent is a fuel for an economy and these regimes will help growth.
These visa regimes have been very popular with Indians. People realised that they have access to the best of opportunities within a few hours of travel. We wanted to provide swift services for investors to come. We knew we had to make UAE easy to access as money cannot move without the investor and investor cannot move without technology. So, providing access through a visa that allows them to come and go was important.
Another important factor in growth of any knowledge economy is a thriving higher education set-up. How is UAE faring on that?
We have over 50 international universities that have opened a branch. Just a month ago there was the opening of the University of Birmingham. There are a lot of universities that now have a UAE branch. We have been attracting students now to be a part of the education system here. We also have a visa regime for students that allows students to spend another year to find opportunities for growth and jobs rather than cancelling their visa the day they graduate. Such minor change can allow them to continue and be a part of job creation that is happening.
And what is your message to an average Indian businessman or investor reading about CEPA?
Explore. Take it as an opportunity. UAE is a short flight distance away from any city in India. Come and see the infrastructure and meet the authorities. Federal and local govts are very welcoming to businesses and people who seek opportunities for investment. We are giving 100 percent ownership and this gives huge confidence to people to set up businesses. Set shop, scale up and expand.