According to a study conducted by PHDCCI, India’s exports to UAE are projected at US$50 billion by 2027 as there is an untapped potential between the two countries which is being explored by the trade and Industry to enhance the trade volumes, said Industry body PHDCCI.
Revealed comparative advantage (RCA) and Bilateral Revealed comparative advantage (BRCA) also indicate large unexplored trade potential between the two countries, said the analysis conducted by Industry body.
The Comprehensive Economic Partnership Agreement (CEPA) has been signed between India and the United Arab Emirates (UAE) on 18th February, 2022.
Bilateral trade between India and UAE has increased from US$60 billion in 2014 to US$69 billion in 2021.UAE share in India’s exports has registered very small increase from 5.9% in 2014 to 6.4% in 2021, said PHDCCI.
Further, the steady share of UAE in India’s exports and imports demonstrates the mutual importance for both countries to increase their bilateral trade and investment, said the Industry body PHDCCI.
India had trade surplus with UAE from 2014 to 2017 but the gap between exports and imports widened after that, resulting in a trade deficit for India from 2018 onwards till now. The trade deficit of India with UAE stands at US$18 billion in 2021, said the Industry body, PHDCCI.
Under the India- UAE trade agreement, UAE offered duty elimination on more than 97 per cent of its products which accounts for 99 per cent of India’s exports to UAE. This will create new avenues for India and open doors for the rest of the Middle East, parts of Africa and Europe, said Mr. Saket Dalmia, president PHDCCI.
India’s eight major export sectors to UAE i.e. Stone and Glass, Fuels, machinery and electrical, Textile and Clothing, Metals, Chemicals, transport and Vegetables contributed around 90% in India’s total exports to UAE, said Mr. Dalmia.
Majority of India’s exports to UAE are in those product categories in which India has comparative advantage. In 2014, there were five product categories in which India had Revealed Comparative Advantage (RCA), but recently, the number increased to eight product categories, he said.
Detailed analysis of bilateral revealed comparative advantage(BRCA) carried out at HS-6 digit level (around 3479 tariff lines) reveal that India has bilateral revealed comparative advantage in 276 tariff lines which account for 5.4% of UAE’s total imports(US$15.26 billion/US$275 billion) in 2020, said the Industry body, PHDCCI.
Going ahead, there is India’s large trade potential yet to be fully realized with UAE, said Mr. Dalmia.
In light of India’s large untapped potential with UAE, and considering its futuristic growth prospects, India’s exports to UAE are expected to touch US$50 billion by 2027 along with trade surplus, said Mr. Saket Dalima.