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India, UAE eye $100bn in annual trade after signing trade pact

Indian Prime Minister Narendra Modi (R) welcomes Sheikh Hamed Bin Zayed Al Nahyan, Chairman of the Crown Prince Court of Abu Dhabi, to the founding conference of the International Solar Alliance in New Delhi on March 11, 2018. The International Solar Alliance (ISA) organizes more than 121 "sunshine" countries that are situated or have territory between the Tropic of Cancer and the Tropic of Capricorn, with the aim of boosting solar energy output in an effort to reduce global dependence on fossil fuels. / AFP PHOTO / Prakash SINGH (Photo credit should read PRAKASH SINGH/AFP via Getty Images)

India and the United Arab Emirates signed a broad trade and investment pact on Friday (February 18) that will eventually cut all tariffs on each other's goods and aims to more than double the annual trade between the two nations to $100 billion within five years, Reuters reports.

The virtual signing ceremony marks the first trade deal sealed by the Gulf State since it began pursuing such pacts last September in a bid to strengthen its status as a business hub.

India's Prime Minister, Narendra Modi and UAE de facto ruler, Mohammed bin Zayed Al Nahyan, attended the virtual signing by senior officials from both nations, already major trade partners.

The Comprehensive Economic Partnership Agreement (CEPA), as it is known, is expected to boost bilateral non-oil trade from $45 billion to $100 billion within the next three to five years, the UAE said.

"There will be a huge flow of trade and investments between both nations and it's going to open the door for more business opportunities," Emirati Minister State for Foreign Trade, Thani Al Zeyoudi, told Reuters.

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The agreement, which was not immediately made public, eliminates 80 per cent of tariffs on UAE and India goods, while all tariffs are to be removed within ten years, Al Zeyoudi said.

UAE commodities like aluminium, copper and petrochemicals would benefit from the removal of tariffs, he said.

The deal also covers services, investments, intellectual property and a commitment by the UAE to grant 140,000 employment visas to highly skilled workers from India by 2030.

India is the second largest trading partner of the UAE where, each year, billions of dollars in remittances are sent home by more than three million Indians working in the Gulf State.

Al Zeyoudi said that, by 2030, the CEPA would add $9 billion, or 1.7 per cent, to UAE gross domestic product, exports would increase $7.6 billion, or 1.5 per cent, and imports would rise $14.8 billion, or 3.8 per cent.

The CEPA is expected to take 1.5 – 2 years to be implemented.

The UAE is pursuing similar trade and investment deals with nations, including Turkey and South Korea, and expects to soon finalise bilateral negotiations with Israel and Indonesia.

It has also announced a raft of regulatory and social reforms in recent years to make business and life easier in the country, where most of the 10 million people are foreigners.

"We're moving from a regional to a global hub," Al Zeyoudi said, referring to the trade deals and policy announcements.

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