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India-UAE free trade deal to cover 1,000 items across sectors

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Shri Vaibhavi Logistics

NEW DELHI : The India-UAE free trade agreement is expected to cover more than 1,000 products across sectors.

Senior commerce ministry officials said the Union cabinet is likely to vet the deal as soon as the negotiations between the sides come to a fruitful end.

If the Modi government clears the trade deal, it would be the first free trade agreement to be signed by India after a decade.

Exports from India that could benefit from the pact include textiles, gem &  jewellery, petroleum products, engineering & machinery products and chemicals.

The gains will, however, be limited as the import duties on most goods are at 5 per cent in the UAE.

Besides, the duties on most agriculture products, such as meat, fruits & vegetables and tea,are already at zero per cent, so India is unlikely to make substantial gains in the area, the officials said.

The UAE has also drawn up a long list of products, including food items such as dates and confectionery for duty concession.

The officials said the list of trade items are being monitored closely as India needs to protect domestic industry.

While FTA would provide access to the Indian markets, it should not result in the routing of products from other countries, especially China, they said.

The ministry officials said to prevent any misuse of FTA benefits and curb potential illegal inflows of Chinese goods through a key transit hub such as Dubai, India will insist on strict rules of origin.

It may either stipulate a 35 per cent value addition at the UAE for all products to be eligible for duty concession under the FTA or impose similar conditions on select products where it sees the maximum scope for abuse, they added.

They pointed out that the UAE has zero duty or very low duties on a majority of items, making it easier for it to be part of free trade agreements.

About 87 per cent of the products that the UAE imports are currently taxed at 5 per cent, while 11 per cent attract zero duty.

The rest see higher duty incidence or are in the prohibited or special lists of goods, the officials said.

Services pact

Market access in services, including mutual recognition agreements, would also be crucial, the officials said.

In services, both sides might negotiate a deal on labour-intensive sectors, which would ensure free movement of skilled professionals. This is expected to boost job creation in both the countries.

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