No levy on 99% of exports to UAE after FTA inking: Commerce secy

India will reciprocate by allowing duty free access to 80% of the goods imported from the Middle East nation immediately and 90% eventually, while keeping certain sensitive items such as diary products, sugar, tobacco, some petroleum products and those produced by sectors under the country’s production-linked incentive scheme in a negative list, he said.

As much as 99% of Indian goods exported to the United Arab Emirates will attract no levies in a phased manner till 2032, starting from 90% with immediate effect, after the two nations signed a free trade agreement on Friday, commerce secretary BVR Subrahmanyam said on Saturday.

The comprehensive economic partnership agreement has adequate safeguards, including stringent rules of origin and value-addition norms (Mohd Zakir)

India will reciprocate by allowing duty free access to 80% of the goods imported from the Middle East nation immediately and 90% eventually, while keeping certain sensitive items such as diary products, sugar, tobacco, some petroleum products and those produced by sectors under the country’s production-linked incentive scheme in a negative list, he said.

The comprehensive economic partnership agreement has adequate safeguards, including stringent rules of origin and value-addition norms, Subrahmanyam said. “Generally, value addition is in the range of 30-35%, (but) the value addition here is 40%,” he said.

“This agreement has a permanent safeguard mechanism, which will be there as long as the treaty is in place,” Subrahmanyam said. Safeguard mechanisms are of two types – the transient safeguard for a specific period, and the auto-trigger, which kicks in when there is a surge in imports.

It is unlikely that there will be any surge in imports from the UAE as it exports a narrow range of goods to India, such as metals (aluminium, copper, etc.), petrochemicals and farm produce such as dates, he said.

Unlike trade deals with Thailand or other countries in the Asean bloc, there is an element of complementarity between India and the UAE, as the nations do not produce similar goods. However, certain sensitive sectors have been kept on the negative list to protect the domestic industries of both partners, he said.

The trade pact will boost the domestic jewellery industry due to duty-free access in the large Gulf market via the UAE, Subrahmanyam said. Currently, there is a 5% duty on Indian jewellery in the UAE.

Reciprocating, India will give duty concessions on the import of gold up to 200 tonnes annually, which can be used by the domestic industry for value addition. India, which imports about 800 tonnes of gold every year, had imported about 70 tonnes of gold from the UAE in 2020-21.

“We are a major importer of gold,” Subrahmanyam said. “In this particular agreement, we have given them a tariff-rate quota of 200 tonnes, where the tariff in perpetuity will be 1% less than whatever is the tariff charged for the rest of the world.”