How India-UAE trade pact could give a fillip to pharma exports to Gulf
The pact has listed pharma among the key domestic sectors that are going to benefit from this agreement. It is expected to generate an additional 10 lakh jobs in India
This trade agreement is of great significance as India-UAE bilateral trade had declined to $44 bn in 2020-21 due to the pandemic compared to the pre-pandemic levels of about $60 bn. In 2021-22, however, there seems to be a recovery with two-way trade in April-December at $52.76 bn. Exports from India were at $20 billion, while imports from the UAE were $32.7 bn
In a landmark trade agreement between two nations, India and the United Arab Emirates (UAE) on February 18 this year signed the Comprehensive Economic Partnership Agreement (CEPA) to increase bilateral merchandise trade to $100 billion over a period of five years and creation of lakhs of jobs. This trade agreement is of great significance as India-UAE bilateral trade had declined to $44 billion in 2020-21 due to the pandemic compared to the pre-pandemic levels of about $60 billion. In 2021-22, however, there seems to be a recovery with two-way trade in April-December at $52.76 billion. Exports from India were at $20 billion, while imports from the UAE were $32.7 billion.
Is the India-UAE CEPA a gateway to reap benefits for Indian pharmaceutical industry? That is the question being heard in the corridors of Indian pharmaceutical industry. The answer can be in the affirmative as a separate annexe on pharmaceuticals has been incorporated in the India-UAE CEPA to facilitate access to Indian pharmaceutical products. The pact has listed pharmaceuticals among the key domestic sectors that are going to benefit from this agreement which is expected to come into effect in the first week of May and is expected to generate an additional 10 lakh jobs in India. Apart from pharmaceuticals, the India-UAE trade pact is expected to reap significant benefits for the medical devices sector in the country. The separate annexe for pharmaceutical industry, included for the first time in a trade agreement, will enable automatic registration and market authorization of Indian generic formulations in just 90 days.
More importantly, the pact will also provide wider access to the much larger Arab and African markets for Indian businesses, including the pharmaceutical industry. There is an emerging opinion among the policy makers in Indian government that the India-UAE CEPA will revive a long-shelved Free Trade Agreement (FTA) with the Gulf Co-operation Council, a six-nation grouping of the UAE, Saudi Arabia, Kuwait, Bahrain, Qatar and Oman, and will pave the way to markets in Africa, especially for India's pharmaceutical sector. With the UAE an important transit point for goods and people, this is not an unreasonable expectation, provided Indian industry, especially the ailing MSME sector, can live up to the potential offered by the FTA, and exports match imports. Besides, sealing the CEPA with the UAE in a record time of 88 days will give India greater confidence in pursuing the ongoing FTA negotiations with trade partners such as the UK, Canada, Australia and the EU. Once the FTA negotiations with these nations become fruitful, one of the key sectors that can reap immense benefit is the Indian pharmaceutical industry.
The India-UAE CEPA is also significant as UAE drug market is estimated to be valued at $8.8 billion by the year 2029. This will be driven by the ongoing Covid-19 pandemic and altering disease profile giving scope for biosimilars and biologics to be marketed from India. Besides, UAE is known for its rising health expenditure, inclination towards innovative drugs, and vigorous investments in healthcare infrastructure. The India-UAE CEPA covers commitments in trade in goods, trade in services, technical barriers to trade, dispute settlement, telecom, customs procedures and pharmaceuticals. Chapters on digital trade, government procurement and IPR have been included for the first time by India in a trade agreement. But these would be followed mostly only on a 'best endeavour' basis where disputes cannot be filed. The agreement has stringent rules of origin and value addition norms to prevent third-country imports for making their way into India from the UAE, a global trading hub, at concessional duties. Definitely, India-UAE trade pact will augment exports. Indian exporters are likely to make substantial gains in labour-intensive sectors such as pharmaceuticals and medical devices. It will be a gateway to give an impetus to Indian pharmaceutical exports to the entire Middle East region.
(The author is freelance journalist with varied experience in different fields)