Alexander Cornwell, Manoj Kumar

NEW DELHI/DUBAI -Indian and United Arab Emirates have signed a comprehensive trade and investment pact that was finalized Friday. It will ultimately reduce all tariffs and aims for increased trade between both countries to $100 billion over the next five years.

This virtual signing is the first commercial deal that the Gulf state has signed since its September 2017 start to pursue such pacts in an effort to increase its business hub status.

India’s Prime minister Narendra Modi signed the agreement with Sheikh Mohamed bin Zayed Al Nahyan (de facto ruler of UAE), during a virtual summit.

According to India’s Prime Minister, the Comprehensive Economic Partnership Agreement (CEPA) is set to increase bilateral non-oil trade by $60 billion to $100Billion over the next three to five year period.

According to Thani al Zeyoudi (Emirati Minister State For Foreign Trade), “There will be a tremendous flow of trade, investments and between both countries and it’s opening the door for greater business opportunities.”

Al Zeyoudi explained that the deal, although not made public immediately, removes 80% of India and UAE tariffs. All tariffs must be removed by Al Zeyoudi within ten years.

The removal of tariffs on UAE commodities, such as aluminum, and petrochemicals, would be a benefit, he stated.

This deal includes services, investments and intellectual property. The UAE also committed to granting 140,000 visas for employment to Indian highly-skilled workers by 2030.

India is the UAE’s second-largest trading partner. More than three million Indians who live in the Gulf send billions in remittances each year to their home countries.

According to the UAE’s economy ministry, CEPA will add $9B, or 1.7%, annually, to UAE’s gross domestic product by 2030. Exports would grow $7.6B, or 1.5%; and imports would climb $14.8 billion or 3.8%.

It is anticipated that the CEPA will take between 1.5-2 years for implementation.

UAE seeks similar investment and trade deals with countries such as Turkey and South Korea. It expects to conclude bilateral negotiations soon with Israel and Indonesia.

The government has made a number of social and regulatory changes in recent years in order to facilitate business in the country, where the majority of its 10 million inhabitants are from abroad.

Al Zeyoudi declared, “We’re shifting from a regional hub to a worldwide hub,” referring to policy announcements and trade deals.