Utilisation of the India-UAE Free Trade Agreement (FTA) by Indian exporters could be as high as 50 per cent in the first year of implementation, based on the Certificate of Origin (COO) issued for exports, according to official sources.

While the figure may go down a bit after cross-checking with the UAE, the utilisation rate of the India-UAE FTA is set to be way more than the utilisation of other FTAs with partners, such as Japan, South Korea and the ASEAN, per initial data collated by the Commerce Department.

“We are expecting 50 per cent utilisation of the India-UAE FTA based on the COO issued. It has to be corroborated with data from the UAE government on the actual Indian exports on preferential terms that have taken place. There is a possibility that actual utilisation may be slightly lower than the COO issued, as some exporters getting the certificates may not have exported. We will come up with the exact numbers soon,” a source tracking the matter told businessline.

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COOs are given by governments to their exporters certifying that the products that are being exported have been produced in the country and meet the rules of origin under the FTA. Based on the COOs, partner countries allow the items at lower import tariffs agreed under the pact.

 The India-UAE FTA, formally called the Comprehensive Economic Partnership Agreement, was implemented in May 2022.  Its utilisation rate is way higher than the FTAs with other partners such as the ASEAN, Japan and South Korea (which have been lower than 20-25 per cent, according to various estimates) because of greater awareness amongst exporters this time due to regular outreach programmes and the immediate benefits that the gems and jewellery sector got with import tariffs coming down to zero from 5 per cent, the source explained.

Outreach programmes help in increasing FTA utilisation as exporters are made to understand what formalities they need to carry out to be eligible for the FTA benefits and hence their confidence in opting for the benefits goes up.

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‘So far in the India-UAE FTA, our main utilisation is coming from the gems and jewellery sector. The 5 per cent immediate benefit in tariffs is significant value wise,” he said. Exports from the sector increased to $5.77 billion in 2022-23, which was 17 per cent higher than exports worth $4.95 billions the previous fiscal.

Apart from gems and jewellery, the items which gained most from the CEPA include petroleum products, electrical machinery, mechanical appliances, automobiles and cereals, according to government data.

India’s exports to the UAE increased 11.8 per cent to $31.3 billion in 2022-23 compared to the previous fiscal which was more than double the 4.8 per cent increase in exports to rest of the world (excluding UAE).

India’s imports from UAE increased by 18.8 per cent in 2022-23 to $ 53.2 billion. Non-oil imports from the UAE during the fiscal increased at a lower 4.1 per cent.

“TheIndia- UAE FTA usage by Indian exporters is expected to increase in the coming years as deeper duty concessions in numerous areas get rolled out,” the source said.

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