New Delhi
Indian goods worth as much as $26 billion, which are currently taxed at 5% by the UAE, will be allowed at zero duty once the free trade agreement (FTA) with Abu Dhabi comes into force by May.
It will particularly help labour-intensive sectors, including textiles and garments, agriculture, leather and footwear, where domestic exporters typically operate at thin margins.
Some of the remaining traded items, which will also have duty-free access to the UAE market under the FTA, currently attract higher duties and some others are already granted tax-free entry. So, the extent of duty relief in these products varies accordingly.
While Abu Dhabi has offered duty-free access to 90% of Indian exports to it, New Delhi will allow 80% of the UAE’s supplies at zero tax. Both the countries are aiming to raise bilateral trade to $100 billion in five years.
According to the ministry’s analysis, the Indian textile and garment sector will see additional exports of $2 billion to the UAE over the next 5 years due to the FTA. Of this, incremental exports in man-made fibre textiles alone will be to the tune of $650 million.
In engineering goods, exports are projected to grow. Similarly, exports of plain gold jewellery and gold-studded jewellery to the UAE are expected to surge by FY24.
In the pharmaceutical sector, exports to the UAE are projected to witness a compounded annual growth. The commerce ministry also expects additional plastic exports to the UAE in five years.
In agriculture, additional exports to the UAE are projected to be about $850 million in five years, while in automobiles and leather & footwear, extra exports are estimated. In services, the UAE has offered easier access in 111 sub-sectors to India, while New Delhi has offered 100.
Source: Financial Express