The India–UAE Comprehensive Economic Partnership Agreement (CEPA) entered into force on 1 May 2022, making it the fastest-negotiated modern FTA between a major economy and a regional bloc. The headline figures are impressive: more than 97 percent of Indian tariff lines covered for UAE exporters, and immediate duty-free access on more than 80 percent of UAE tariff lines for Indian goods. Bilateral trade has grown from approximately $43 billion in the year before CEPA to above $85 billion by 2025.
What the headline figures do not convey is the distribution of benefits. For some categories, CEPA delivers immediate, substantial, and practically claimable duty savings. For others — including several categories where the commercial incentive to use CEPA appears highest — rules of origin requirements, annual quota caps, or phase-in schedules mean that the nominal rate and the applicable rate diverge significantly. Importers and exporters who did not analyse the schedule in detail before adjusting their sourcing or routing patterns have occasionally discovered that the anticipated savings are unavailable for their specific product.
What CEPA actually covers: the tariff schedule highlights
For Indian exports to the UAE, the most commercially significant duty reductions are in textiles and apparel, where UAE applied MFN duties were already moderate; gems and jewellery, where the UAE eliminated a 5 percent import duty that was significant on high-value shipments; pharmaceuticals, which gained duty-free access immediately; and engineering goods including machinery and mechanical equipment. The UAE has historically maintained relatively low MFN tariff rates (typically 5 percent across most manufactured goods, zero on many categories), which means that for many product categories, CEPA provides a 5 percentage point advantage over non-CEPA origins — meaningful but not transformational.
For UAE exports to India, the picture is more nuanced because India's MFN tariff schedule is more varied. Categories with high MFN rates where CEPA provides access include aluminium products, where India applies MFN duties of 7.5 to 10 percent on various forms and CEPA provides duty-free or reduced-rate access; certain petroleum products where the CEPA schedule includes partial relief; and food products including dates, where India historically applied duties of 50–100 percent and CEPA provides substantial reductions.
Steel is among the most closely watched categories. India applies basic customs duty of 7.5–10 percent on steel flat products plus anti-dumping duties on specific origins. CEPA provides for duty reduction on steel from the UAE, but UAE-origin steel is subject to rules of origin requirements that effectively require local value addition — the product cannot simply be imported from a third country and transshipped through the UAE. This distinction matters because several UAE free zone operators have promoted themselves as CEPA-compliant transit points for steel without meeting the substantive manufacturing requirements.
Rules of origin: the practical constraint
Rules of origin (ROO) are the mechanism by which trade agreements prevent tariff shopping — the practice of routing goods through a preferential partner country without genuine manufacturing or value addition. The India–UAE CEPA uses a combination of ROO criteria: change in tariff heading (CTH), regional value content (RVC), or specific process requirements, depending on the HS chapter.
For textiles and apparel — a major category for India–UAE trade — CEPA uses a double transformation rule: yarn must be produced from fibre, and fabric must be produced from yarn, both within the claiming country. This effectively requires integrated textile manufacturing. A garment assembled in the UAE from Indian fabric cannot claim CEPA preference when re-exported to India, because the double transformation requirement is not met from the UAE side. This is a common misconception in the industry.
"The key question for any CEPA benefit claim is not where the goods were last physically located before export. It is where the substantial transformation that created the product's essential character occurred. CEPA origin is about manufacturing, not geography of shipment."
For metals — aluminium and steel — the RVC requirement is typically 35–40 percent of the ex-works value of the product. For an aluminium extrusion produced in a UAE facility from imported aluminium billet, this means that 35–40 percent of the production cost must be attributable to UAE inputs or processing. UAE aluminium producers using Aluminium Bahrain (Alba) or Emirates Global Aluminium (EGA) primary metal as feedstock can generally meet this requirement. Re-exporters buying finished aluminium products from outside the UAE and shipping through a free zone cannot.
Documentation requirements are the implementation hurdle. CEPA preference claims require a Certificate of Origin issued by an approved body — the Dubai Chamber of Commerce, the Sharjah Chamber, or equivalent bodies — that certifies compliance with the applicable ROO. The certificate requires supporting documentation: manufacturing cost breakdowns, input purchase records, and process descriptions. Companies that have not built the documentation process will find that claiming CEPA preference retrospectively on past shipments is administratively difficult and may be rejected during audit.
Practical steps for importers and exporters
The first step for any company seeking to use CEPA is a tariff schedule analysis for their specific HS codes — not the category-level coverage figures that appear in trade association materials. The applicable duty rate, the phase-in schedule if the product has a staged reduction, and the ROO requirement for that specific HS heading need to be established before any claim is made.
The second step is a manufacturing audit: can the goods being imported or exported actually meet the applicable ROO? This requires a bill of materials-level analysis of where inputs originate and a process description that maps to the applicable CTH or RVC criteria. For complex manufactured goods with global supply chains, this can require significant data collection from upstream suppliers.
The third step is documentation infrastructure. Certificate of Origin applications require consistent supporting documentation at each shipment. Building this into the export operations workflow — rather than treating it as a finance or compliance afterthought — is the difference between systematically claiming preference and occasionally claiming it when someone remembers to.
CEPA in context: what comes next
India has been pursuing an FTA with the Gulf Cooperation Council as a whole — separate from the bilateral India–UAE CEPA — since 2004. Negotiations have restarted multiple times and been suspended due to disagreements over agricultural access (the GCC wants reduced Indian tariffs on dates, dairy, and processed foods) and hydrocarbon trade terms. A GCC-India FTA, if concluded, would extend CEPA-equivalent benefits to Saudi Arabia, Qatar, Bahrain, Kuwait, and Oman — a materially larger market opportunity for Indian exporters in particular.
India has also concluded or is negotiating FTAs with several other markets relevant to its manufacturing export strategy: the India–Australia Economic Cooperation and Trade Agreement (ECTA), concluded in 2022; negotiations with the UK, Canada, and the EU. For companies building long-term trade strategy around preferential access, the India–UAE CEPA is the most mature and immediately actionable instrument, but it operates within a broader FTA landscape that is evolving rapidly.
The practical implication for CFOs and trade managers is that CEPA benefit quantification should be a standing item in annual duty cost reviews, not a one-time analysis. Phase-in schedules are updating, product coverage is expanding, and the enforcement environment — including customs audits of origin claims — is becoming more rigorous as the volume of CEPA traffic grows. The companies that have invested in clean origin documentation and systematic claiming processes are capturing duty savings that competitors are leaving on the table.