INDIA-UAE COMPREHENSIVE ECONOMIC

PARTNERSHIP AGREEMENT (CEPA)

Commercial Guide for India-UAE-EU Trade Flows

This guide covers the India-UAE CEPA — in force since May 2022 — and its significance for trade facilitation, with particular focus on how Indian exporters can use the UAE as a regional hub for onward distribution to the EU and other markets, and the rules of origin considerations that apply.

1. Overview of the India-UAE CEPA

The India-UAE Comprehensive Economic Partnership Agreement (CEPA) entered into force on 1 May 2022, making it India's first FTA with a Gulf Cooperation Council (GCC) member state and one of the fastest-negotiated bilateral trade agreements in India's history (negotiations concluded in approximately 88 days).

The CEPA covers:

Trade in Goods: Tariff elimination or reduction on approximately 80% of Indian exports to the UAE and approximately 90% of UAE exports to India by value. Phase-down over 10 years for sensitive sectors.

Trade in Services: Enhanced market access in over 100 sub-sectors including IT, financial services, healthcare, education, and professional services.

Investment: Provisions supporting bilateral FDI flows.

Government Procurement, Intellectual Property, and e-Commerce: Framework provisions.

Key bilateral trade statistics at a glance: India-UAE bilateral trade exceeded USD 85 billion in 2022-23, making the UAE India's second-largest export destination and third-largest trading partner overall. The UAE is home to over 3.5 million Indian nationals and a large Indian business community.

2. Key Tariff Benefits for Indian Exporters to the UAE

Note: The UAE applies a standard 5% customs duty under the GCC Common External Tariff on most goods. For goods currently at 0% (e.g. ITA-covered electronics), the CEPA benefit is in non-tariff areas. Check the official India-UAE CEPA tariff schedule at commerce.gov.in for the specific product line.

3. The UAE as a Trade Hub — India-UAE-EU Strategy

A key commercial opportunity arising from the India-UAE CEPA is the ability for Indian businesses to use the UAE as a regional distribution and processing hub for onward trade to the EU, Africa, and the wider Middle East. This strategy — sometimes called the "India-UAE-EU corridor" — works as follows:

3.1 Re-Export Model

Indian goods are exported to the UAE under the CEPA (zero/low duty), stored or lightly processed in UAE free zones (Jebel Ali Free Zone — JAFZA, Dubai Airport Free Zone — DAFZA, KIZAD, etc.), then re-exported to EU buyers. The UAE has excellent connectivity to European ports and can serve as a consolidation point for smaller Indian exporters who cannot fill full containers for direct Europe service.

Key consideration: EU customs rules require goods to qualify for EU preferential duty rates under the applicable preference scheme (EU GSP or India-EU FTA) based on their Indian origin. Re-export through the UAE does not affect the Indian origin if the goods are not processed in the UAE — the direct transport rule and non-manipulation conditions must be met. For EU preferential claims, the origin document (REX statement or Form A) must reference India as the country of origin, not the UAE.

3.2 Processing in UAE Free Zones

If goods are processed in the UAE (e.g. final assembly, blending, packaging), the UAE processing may create UAE origin — which could disqualify the goods from Indian preferential origin under the India-EU FTA or EU GSP. Exporters using UAE free zones for any processing beyond minimal operations should obtain a legal opinion on origin retention before making preferential origin claims on goods shipped from the UAE to the EU.

3.3 UAE-EU Trade Relations

The UAE and EU are currently negotiating an FTA — the UAE-EU Partnership Agreement. If concluded, goods manufactured in the UAE could benefit from preferential EU market access independently of Indian origin. Indian businesses with UAE-based manufacturing or processing operations could benefit from this as a separate strategic option.

4. Rules of Origin Under the India-UAE CEPA

To claim preferential tariff rates under the India-UAE CEPA, Indian exporters must provide proof of Indian origin. The India-UAE CEPA uses a Certificate of Origin issued by an authorised body — not REX self-certification. Key points:

Origin criteria: Goods must be either wholly obtained in India or sufficiently processed in India. The product-specific rules are defined in Annex 2 of the India-UAE CEPA.

Certificate of Origin issuing bodies: Export Inspection Council (EIC), FIEO, chambers of commerce, and other bodies authorised by DGFT.

Format: CEPA-specific Certificate of Origin — not Form A or REX. The document must state "India-UAE CEPA" and reference the specific provision of the Agreement.

Direct transport rule: Goods must be transported directly from India to the UAE, or transit through a third country under customs control without further processing.

Cumulation: The CEPA allows bilateral cumulation — UAE-originating materials used in Indian production can be counted as Indian-originating inputs for RVC calculation purposes.

5. Services Under the India-UAE CEPA

The services chapter is particularly significant for trade facilitators, IT service providers, and professional services firms:

IT and IT-enabled services: Enhanced access for Indian IT professionals in the UAE under Mode 3 (commercial presence) and Mode 4 (movement of natural persons).

Healthcare: Indian healthcare providers (hospitals, clinics) can establish in the UAE with eased conditions.

Education: Indian educational institutions can establish branches in the UAE.

Financial services: Some liberalisation for Indian banks and insurance companies.

Mutual recognition of professional qualifications: Framework for recognising Indian professional qualifications (engineers, architects, accountants) in the UAE — facilitating easier deployment of Indian professionals.

6. Key Institutions and Resources

7. India-UAE CEPA Readiness Checklist for Exporters

Doc 52 — India-UAE CEPA Commercial Guide — Neutral Template