India-UAE CEPA, Non-Oil Trade, and Transshipment of Goods

India-UAE Comprehensive Economic Partnership Agreement (CEPA) is driving non-oil trade growth through tariff cuts, easier movement for people, and simplified rules of origin. Small and medium-sized enterprises (SMEs), pharma, and service sectors have gained greater access as both nations target US$100 billion by 2030 and expand logistics network through Bharat Mart and India-Middle East Economic Corridor (IMEC) project.

The CEPA between India and the United Arab Emirates (UAE), which came into force on May 1, 2022, has created one of Asia’s most important trade corridors. The pact has expanded non-oil trade and opened new opportunities in services and investment. It has become a reference point for how bilateral agreements can drive resilience in volatile global markets.

Trade diversification and growth since CEPA

India-UAE merchandise trade has almost doubled within three years from US$43.3 billion in FY 2020-21 to US$83.7 billion in FY 2023-24. Of this, non-oil sectors contributed US$57.8 billion. In the first half of 2025 alone, non-oil trade touched nearly US$38 billion, a 34 percent year-on-year increase.

India’s export basket has gone beyond gems, petroleum products, and food. Smartphones, engineering goods, and chemicals now account for a growing share in its world export. Engineering products form a dominant portion at 26.67 percent of exports, but electronics recorded the fastest expansion in FY 2024-2025, rising 32.46 percent to US$38.58 billion. Smartphones alone generated US$2.57 billion in exports to the UAE in FY 2023-24. The CEPA also benefits pharmaceuticals, textiles, and marine products from simplified customs and automatic registration.

India still runs an overall trade deficit with the UAE, but the gap has narrowed as non-oil exports rose to US$27.4 billion in FY 2023-24, with an average annual growth of 25.6 percent since CEPA began.

Tariff elimination and rules of origin

CEPA provided India with wide tariff concessions. The UAE removed duties on 97 percent of tariff lines, which is for 99 percent of India’s exports by value. More than 6,090 products (80.3 percent of tariff lines) became duty-free on day one, and others are scheduled for phased reductions over five to ten years: 4.4 percent (1,089 products) over 5 years and 2.4 percent (180 products) over 10 years. Only 2.4 percent of tariff lines (187 products) remain excluded from this relief.

India also granted a lot of concessions to the UAE. India eliminated tariffs on 64.6 percent of products (7,694 products) immediately and committed to gradual reductions in following manner:

• 18.27 percent (2,176 products) in five or seven years phased elimination;
• 1.89 percent (225 products) in 10-year phased elimination; and
• 5.51 percent (656 products) in phased reduction with up to 50 percent cuts

Sensitive items like dairy, cereals, fruits, and tea (total 1,157 products) were excluded by India to protect its domestic producers.

To ensure that benefits accrue only to genuine producers, CEPA has strict rules of origin. CEPA has separate chapters to deal with the compliance of rules of origin. It mandates that agricultural exports need to be wholly obtained, chemicals must achieve at least 40 percent value addition, and steel is subject to a “melt and pour” clause. Only direct exports are eligible for these benefits, which means transshipped goods do not qualify.

Certificates of origin are now processed online through DGFT portal of Indian government. Since 2022, more than 240,000 certificates have been issued to utilize CEPA’s preferential duties, which covers US$19.87 billion in preferential exports.

Tackling non-tariff barriers

CEPA has reduced many non-tariff obstacles, but challenges remain in other sectors. For example, toys still require authorization under the Gulf Cooperation Council (GCC) G-mark system, and conformity assessments requires several testing and inspections. Textile products from India still face complex customs clearance requirements like mandatory customs clearance for local content and importing license documents, which add to the cost of exporters.

Even so, the number of technical and sanitary notifications has declined, and customs procedures are moving toward faster, more predictable processing.

Services and investment flows

The agreement also covers services liberalization. India offered 100 sub-sectors and the UAE extended commitments across 111. UAE has committed to 100 percent foreign ownership in sectors like computer services, consultancy, research and development, hospital operations, and air transport.

It also has provisions for easing the movement of professionals. Business visitors can stay up to 90 days, contractual service suppliers up to one year, and intra-corporate transferees up to three years.

UAE as a re-export and transshipment hub

Jebel Ali Free Zone (Jafza) has emerged as an important gateway for India’s re-export activity. It has more than 2,300 Indian companies operating and employing around 15,000 people. In 2024, trade volumes between India and Jafza increased by 40 percent, and trade value grew by 17 percent. Jafza welcomed 283 new Indian companies in 2024, a 15 percent year-on-year increase.

The upcoming Bharat Mart project at Jafza  will provide 2.7 million square feet of retail, logistics, and warehousing space linked to Jebel Ali Port, Al Maktoum Airport, and Etihad Rail from 2026. It will have 1,500 showrooms and incubation zones for women-led businesses.

Despite the UAE’s role as a re-export hub, India has expressed no intention in rerouting goods to the US. At the 13th India-UAE High-Level Task Force on Investments in September 2025, India’s Commerce Minister stated that India would not use the UAE as a transshipment base for goods destined for the US because of tariff and compliance risks. Instead, India is encouraging re-exports from the UAE to neighboring Asian and African economies.

CEPA itself has some regulatory safeguards to guard against misuse. It has assurances that UAE goods that only pass through India are not subjected to India’s anti-dumping duties, and only direct exports are eligible for CEPA benefits, not transshipped goods.

Regulations and compliance requirements

Indian exporters face a multi-agency process for obtaining Certificates of Origin, issued by 18 different bodies. By contrast, the UAE has brought this function under one platform through its Ministry of Economy. Exporters must also meet minimum information requirements, including profit, and be prepared for document exchanges between competent authorities to verify claims within strict timelines. They should stick to product specific rules (PSR) in exports to prove substantial transformation happened through methods like Change in Tariff Classification (CTC) or Qualifying Value Content (QVC).

The Tariff Rate Quota (TRQ) mechanism adds another layer of complexity. Products like gold, plastic goods, and copper are subject to quantity-based preferential treatment. For instance, annual imports of Low-density Polyethylene into India are capped at 50,000 MT at a 0 percent tariff, but quantities above this limit face a 7.5 percent duty.

The pharmaceutical sector receives special treatment under CEPA. Indian drug makers can access a 90-day automatic registration and market authorization process in the UAE. Products approved by reference regulators (US FDA, UK MHRA, EU EMA, Japan PMDA), and regulators in Australia and Canada, are exempt from further inspection, which reduces costs and helps in market entry for both countries’ firms.

SME and MSME support systems

CEPA also has incentives for promoting inter-country trade between smaller enterprises. A Joint SME Committee has been set up to promote collaboration between Indian and Emirati firms and identify commercial opportunities. On the Indian side, schemes such as the Market Access Initiative and International Cooperation Scheme provide financial support for participation in UAE trade fairs, sector exhibitions, and promotional campaigns.

The UAE side has also seen tangible gains. The Abu Dhabi Chamber reported a 10.3 percent year-on-year increase in certificates of origin issued between June 2024 and June 2025 to MSMEs. The Chamber is helping smaller firms integrate into cross-border supply chains by creating training, matchmaking, and partnership facilitation programs.

India and UAE are also looking at financial integration through local currency settlement systems and linking payment platforms. The integration of India’s Unified Payments Interface (UPI) with UAE’s instant payment platform (AANI) holds promise to reduce transaction costs and improve settlement times even for smaller firms.

Strategic geopolitics and corridor development

The CEPA is part of a wider geopolitical strategy linking India, the UAE, and Europe. The India-Middle East-Europe Economic Corridor (IMEC) aims to cut shipping times between India and Europe by as much as 40 percent. The UAE is a central hub in this vision and an economic bridge between Asia and Europe.

For India, this dovetails with its “Link West” policy, which seeks deeper economic engagement with Middle East through logistics integration, energy and digital trade.

Performance metrics and future roadmap

Trade data shows CEPA has been performing well so far. India issued 122,036 Certificates of Origin under the agreement in FY 2024-25, compared with 98,104 in the previous year, a 24.7 percent increase. As mentioned above, since the agreement took effect, nearly 240,000 certificates have been issued for exports worth US$19.87 billion.

Non-oil trade between India and the UAE grew 34 percent year-on-year in the H1 of 2025 to US$38 billion because of higher utilization of CEPA benefits and participation from both large and small firms.

Looking at the future, both countries have set ambitious targets for bilateral trade. They aim to double non-oil, non-precious metals trade to US$100 billion by 2027-2030, up from current levels of US$50-55 billion. The overall bilateral trade target is US$200 billion by 2030, and services trade is expected to rise to US$15 billion.

They have set up institutional mechanisms to monitor the progress and address glitches, if they arise. The Joint Committee under CEPA has already met twice at Joint or Additional Secretary level. It is supported by multiple subcommittees on goods, services, rules of origin, and customs procedures in implementing the agreements.

But the long-term success of CEPA depends on exporters’ ability to walk with changing sustainability and digital trade policies, and volatile trade environment. If both governments maintain the present trust and cooperation, businesses in India and the UAE can meet the ambitious 2030 trade targets and set up profitable trade networks.

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