India-UAE CEPA: Two Years On — What Is Working and What Is Not

India-UAE CEPA was negotiated in 88 days — a record for India. It provides 0% duty on 97.99% of Indian tariff lines exported to UAE. Two years in, bilateral trade has grown from approximately USD 72B to USD 85B — an 18% increase. But the headline numbers mask a more complex implementation story.

What is working: Engineering goods, pharmaceuticals, and gems have seen the most immediate benefit. Indian pharma exports to UAE grew 24% in the first two years. Engineering goods exporters from Gujarat and Maharashtra report 0% duty access has opened UAE supply chain opportunities previously blocked by the former 5% general duty.

What is not working: CEPA utilisation rate is estimated at 40-55%. Primary reasons: (1) Rules of origin documentation — many Indian SME exporters cannot substantiate 40% India value addition, (2) COO issuance bottlenecks at authorised issuing bodies, (3) UAE importer awareness gaps, (4) Sensitive product exclusions on both sides.

Lessons for India-EU FTA: The CEPA experience shows the importance of investing in COO issuance capacity before FTA entry into force, training Indian MSMEs on RoO compliance, and establishing bilateral trade facilitation committees to resolve early implementation disputes.