On 18 February 2022, the UAE and India signed a Comprehensive Economic Partnership Agreement (“CEPA”), that entered into force on 1 May 2022.

It aims to boost bilateral trade between the UAE and India to $100 billion in the next five years and could potentially pave the way for a broader free trade agreement (FTA) with other GCC countries. This is one of the first UAE FTAs signed independently of other GCC countries.

The CEPA comes into force as the UAE is seeking to deepen its ties with fast-growing economies and is expected to produce potentially larger exports of metals and minerals, petrochemical, petroleum products, copper and aluminum and dates from its territory. Furthermore, India has given tariff concessions on gold imports from the UAE, while the UAE has eliminated tariffs on jewelry imports from India.

Through this trade pact, the participating countries have agreed to customs duty concessions on approximately 80% of the good originating from the UAE and India. The tariff rate concessions have been classified into four categories: immediate elimination, phased elimination, tariff reduction and exclusion. Tariffs on products (other than excluded goods), are expected to be eliminated within 10 years.

Some of the main pillars of ties include:

  • Energy (Oil)
  • Gems and jewelry
  • Apparel
  • Electric machinery

For the full list of goods included, please see Annexes of Comprehensive Economic Partnership Agreement.

Dubai Customs has issued a Customs Policy No. 54/2022 on the conditions and regulations of implementation of the CEPA between the UAE and India. The policy further explains the conditions on how certain products may be granted preferential treatment, including:

  • Products should be shipped directly[1] from one Party’s territory to another
  • Products should be considered originating in a Party, meaning that they are wholly obtained or produced in the Party’s territory or have undergone sufficient value added percentage[2]
  • Products originating from the UAE and India should be accompanied by a certificate of origin (COO) issued by the respective competent authorities
  • At the time of importation, a request should be submitted by the importer

India Customs vide Notification No. 39/2022-Customs (NT), dated 30 April 2022, has notified the Rules of Origin under the India-UAE CEPA. The criteria for determining origin are mentioned in aforesaid paragraphs, with an additional requirement that the Indian importers need to comply with to avail the preferential rate.

In India, a COO may not be sufficient to substantiate the origin of goods – importers are also required to ensure compliance with CAROTAR[3].

CAROTAR indicated that importers are required to possess sufficient information and exercise reasonable care for claiming benefits under the FTA. However, information maintained under CAROTAR should be submitted only when an inquiry is made by a customs officer. The information to be maintained, inter-alia, includes:

  • Originating criteria
  • Details on production process(s)
  • Regional value content details

Non-compliance with CAROTAR may result in denial of preferential treatment of goods.

To prepare for the Agreement’s entry into force, Companies should determine if their products would be included in the Agreement’s provisions and whether the Company meets the Agreement’s requirements.

For more information on this topic, or to learn about our Trade & Customs Services in the Middle East and India, kindly contact our Customs & International trade team at KPMG in the UAE and KPMG in India.

References

[1] Exceptions/restrictions apply

[2] Not less than 40% of total product’s value