UAE has witnessed a significant surge, recording a remarkable 21.35% growth and reaching a total trade volume of $80.51 billion between April 2024 and January 2025.
This sharp upswing in trade is widely attributed to the Comprehensive Economic Partnership Agreement (CEPA), which came into effect with the intention of strengthening economic ties and enhancing cooperation across key sectors between the two nations. This rise not only signals a deepening economic partnership but also reflects the success of proactive policy-making and mutual economic interests.
The CEPA, signed in 2022, laid the groundwork for reducing tariffs, improving market access, streamlining customs procedures, and facilitating greater movement of goods, services, and investments. Since its implementation, both countries have experienced increasing economic collaboration, and the latest trade figures offer tangible proof of this success. The agreement has played a crucial role in eliminating trade bottlenecks, enhancing transparency, and encouraging businesses on both sides to explore new avenues. This has led to increased investor confidence and the acceleration of export-import activities in high-growth sectors.
Among the sectors that have recorded notable gains are smartphones, electrical machinery, and chemicals. The smartphone segment, in particular, has become a prominent component of India’s export profile to the UAE. India’s electronics manufacturing ecosystem, boosted by domestic initiatives such as the Production Linked Incentive (PLI) scheme, has matured significantly. With global smartphone brands setting up manufacturing units in India, the country has emerged as a competitive hub for electronics exports. The UAE, with its high consumer demand, strategic re-export capabilities, and technology-driven market, has become a key destination for Indian electronics, especially mobile devices.
Electrical machinery is another sector that has benefited immensely from the CEPA framework. This includes a broad range of products such as industrial equipment, power generation components, transformers, and household appliances. The increased trade in this sector reflects the rising demand for technologically advanced machinery and infrastructure development tools in the UAE, which is undergoing rapid economic diversification and urban expansion. Indian manufacturers, known for their quality and cost-effectiveness, are capitalizing on this demand, offering competitive alternatives to suppliers from other parts of the world.
The chemical industry, encompassing organic and inorganic chemicals, pharmaceuticals, and fertilizers, has also seen a considerable uptick in trade volume. India’s strength in chemical production, driven by a vast pool of skilled chemists, a robust domestic market, and export-ready infrastructure, has made it an attractive partner for the UAE. The Gulf country, with its focus on ensuring food security and supporting healthcare infrastructure, has increased its imports of chemical products from India to meet growing demand. This sector is expected to continue on its growth trajectory, especially with new collaborative ventures in research and development and specialty chemicals.
The CEPA has not only boosted trade figures but also served as a model for India’s broader economic diplomacy. By entering into such agreements, India is positioning itself as a reliable trade partner, capable of engaging in mutually beneficial economic arrangements with major global players. The UAE, on the other hand, has demonstrated a commitment to deepening its engagement with India, acknowledging the South Asian nation’s strategic importance in the global supply chain and its expanding economic clout. The agreement has fostered a sense of predictability and trust, enabling businesses to make long-term plans with greater confidence.
The trade growth also signifies the strengthening of the strategic partnership between the two nations beyond just economic interests. India and the UAE share historical cultural ties, a substantial Indian diaspora presence in the UAE, and robust cooperation in areas such as energy, defense, education, and climate change. The success of CEPA is likely to act as a catalyst for deeper engagement in these areas as well. Additionally, this surge in trade is expected to generate employment opportunities in both countries and contribute to overall economic growth. For India, enhanced exports mean increased job creation in manufacturing and allied services, while the UAE stands to benefit from diversified imports and strengthened supply chains.
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