Anand Madia OSD to Chief Minister, Maharashtra
Mumbai, 11th August 2023: The India-UAE Free Trade Agreement (FTA) holds immense promise for the state of Maharashtra, a prominent contributor to India’s GDP. Effective from May 1, 2022, the FTA sets a goal to escalate bilateral trade between India and the UAE from $60 billion to $100 billion within the next five years.
Beyond the augmentation of trade, the FTA is poised to facilitate heightened investment flows between the two nations. Already, UAE-based companies have invested over $35 billion in India, with Maharashtra being a significant beneficiary. This influx of investment not only injects capital but also introduces cutting-edge technologies and modern business practices, fostering the state’s economic advancement.
Thriving Bilateral Trade Between India and UAE
India and the UAE share robust economic ties, evident in the UAE’s non-oil trade with India surpassing $45 billion in 2021. This marked a 60% surge from 2020 and an 8% rise from 2019. Impressively, India stands as the UAE’s leading non-oil trading partner, representing nearly 14% of the UAE’s global non-oil exports.
Recent data from the Ministry’s Directorate General of Commercial Intelligence and Statistics showcases India’s exports to the UAE ascending by 17.6% to approximately $18 billion in the April-October fiscal year of 2022. Simultaneously, imports from the UAE during the same period witnessed a 33% growth, totaling $32.3 billion.
The India-UAE FTA harbors the potential to further propel Maharashtra’s economic prosperity by extending broader access to the UAE market for its products and services.
FTA’s Impact on Maharashtra’s Economy
- Tariff Elimination: The FTA’s core provision involves the elimination of tariffs on a comprehensive spectrum of goods and services exchanged between India and the UAE. This harmonization of trade rules streamlines Maharashtra’s businesses’ ability to export to the UAE by mitigating financial constraints. Notably, tariffs on textiles, electronics, and engineering goods – key exports from Maharashtra – will be eradicated. This opens doors for the state’s textile manufacturers, electronics firms, and engineering enterprises to tap into the UAE market.
- Upsurge in Exports: The tariff elimination under the FTA is anticipated to trigger a surge in exports of Indian goods, including those originating from Maharashtra. Data from the Indian Department of Commerce indicates a 23% surge in Maharashtra’s exports to the UAE within the first year of FTA implementation. Noteworthy sectors benefiting from this upswing include textiles, electronics, and engineering goods.
- Enhanced Foreign Investment: With the FTA simplifying business transactions for UAE companies in Maharashtra, the state is poised to attract foreign investment. This influx could materialize in Maharashtra’s manufacturing, services, and agriculture sectors, catalyzing job creation and economic growth.
- Collaboration and Knowledge Exchange: The FTA serves as a platform for collaboration and knowledge sharing between Indian and UAE companies. Such exchanges can facilitate technology transfer and the exchange of best practices. Joint research and development projects could emerge, and Indian firms, including those in Maharashtra, could gain access to advanced technologies developed by UAE counterparts, contributing to global competitiveness.
- Boosting Agricultural Exports: Maharashtra’s agricultural products stand to gain from the FTA, gaining increased access to the UAE market. Major exports like grains, vegetables, and fruits will see tariffs eliminated, simplifying trade and enhancing the viability of the state’s agricultural sector.
The India-UAE FTA has already spurred increased trade and investment between the two countries, especially in sectors like oil and gas, diamonds, precious stones and pearls, machinery and mechanical appliances, and textiles. This agreement has also contributed to stronger cultural and social ties, resulting in amplified travel and migration.
In conclusion, the India-UAE FTA presents a tremendous opportunity for Maharashtra’s economy. It goes beyond mere trade, fostering a symbiotic partnership between the two nations, united by their shared aspiration of using trade as a catalyst for mutual growth and prosperity.
