DGFT & Policy
India-UAE CEPA: Duty Benefits for Indian Exporters
India's first bilateral FTA in a decade. Tariff concessions, 200-tonne gold TRQ, Rules of Origin, DGFT COO portal, and Jebel Ali implications.
By Aaryan Kakani · · 12 min read
Key takeaways
The UAE has been one of India's top three trading partners for over two decades. Bilateral trade hovered around USD 60 billion annually even before any formal trade agreement existed between the two countries. But until February 2022, Indian exporters paid the UAE's standard MFN (Most Favoured Nation) duty rates on every shipment. The same rates applied to goods from countries with no trade relationship at all.
The Comprehensive Economic Partnership Agreement changed that. Signed on 18 February 2022 and effective from 1 May 2022, the India-UAE CEPA is India's first bilateral free trade agreement in over a decade. And its most ambitious one in terms of coverage. The UAE has committed to eliminating or reducing duties on over 97% of its tariff lines for Indian goods, covering roughly 99% of Indian exports by value. For Indian exporters, this means real money saved on every shipment, provided you follow the correct process to claim the benefits.
What Is the India-UAE CEPA?
CEPA stands for Comprehensive Economic Partnership Agreement. Unlike a simple Free Trade Agreement (FTA) that covers only tariffs on goods, a CEPA is broader. It includes trade in goods, trade in services, investment protection, intellectual property, government procurement, competition policy, and digital trade. The India-UAE CEPA covers all of these areas, making it more than just a tariff reduction deal.
The agreement was negotiated in a record 88 days. From the formal launch of negotiations in September 2021 to the conclusion in February 2022. This speed reflected the strong political will on both sides and the existing depth of the India-UAE economic relationship. India already had a large expatriate population in the UAE (approximately 3.5 million Indians), deep energy trade ties, and significant investment flows in both directions.
For Indian exporters, the core benefit is straightforward: the UAE will charge lower (often zero) import duties on qualifying Indian goods. The UAE's standard import duty is 5% on most goods. Under CEPA, this drops to 0% immediately for many product categories and phases down to 0% over 3, 5, or 10 years for others. Given that the UAE is a zero-income-tax jurisdiction, import duties are one of the few cost points that directly affect the landed price of goods. Making even a 5% reduction commercially significant.
Key Tariff Concessions for Indian Exports
The UAE's standard MFN duty on most goods is 5%. Under CEPA, this drops to 0% for the majority of Indian exports. Below are the key product categories where Indian exporters benefit most, along with the CEPA preferential rates and the duty savings compared to MFN rates.
| Product Category | MFN Duty | CEPA Rate | Notes |
|---|---|---|---|
| Gems & Jewellery | 5% | 0% | Under TRQ for certain items; India's largest export to UAE by value |
| Textiles & Apparel | 5% | 0-5% | Immediate elimination on most lines; phased for some synthetic textiles |
| Chemicals & Petrochemicals | 5% | 0-5% | Organic chemicals, pharma intermediates at 0% from day one |
| Plastics & Rubber | 5% | 0% | Immediate duty elimination on most plastic articles and rubber products |
| Engineering Goods | 5% | 0% | Machinery, auto components, iron and steel articles |
| Agricultural Products | 0-5% | 0% | Cereals, fruits, spices, meat, and dairy products |
| Leather & Footwear | 5% | 0% | Finished leather goods and footwear at zero duty |
| Handicrafts & Furniture | 5% | 0% | Wooden furniture, carpets, and handicraft items |
The practical impact is significant. A jewellery exporter shipping USD 1 million worth of gold jewellery to Dubai was previously paying USD 50,000 in UAE import duties. Under CEPA, that drops to zero. Making Indian jewellery more competitive against jewellery from non-CEPA countries like Thailand, Turkey, or Italy that still pay the 5% MFN rate.
For textiles, the savings are equally meaningful. India competes with Bangladesh, Vietnam, and China in the UAE apparel market. While Bangladesh benefits from the UAE's GSP preferences, CEPA gives Indian textiles equivalent or better access. An Indian garment exporter shipping cotton shirts to the UAE now pays 0% duty where Vietnamese competitors still pay 5%.
The Gold TRQ: 200 Tonnes at 1% Duty
One of the most commercially significant provisions in the India-UAE CEPA is the Tariff Rate Quota (TRQ) for gold. Under this arrangement, India allows the import of up to 200 tonnes of gold per year from the UAE at a concessional customs duty of 1% , compared to the standard MFN rate of 12.5% (basic customs duty). This is a massive 11.5 percentage point saving that has reshaped gold import flows into India.
The TRQ is administered by the Directorate General of Foreign Trade (DGFT), which allocates quota quantities to eligible importers. The gold must meet the CEPA Rules of Origin requirements. Meaning it must be refined or substantially processed in the UAE, not merely transshipped through UAE ports.
The gold TRQ has had a visible impact on trade patterns. Prior to CEPA, Switzerland was India's largest source of gold imports. Since CEPA took effect, UAE's share of India's gold imports has increased substantially as importers route purchases through UAE-based refineries to capture the 11.5% duty differential. This has also boosted the UAE's gold refining industry, creating a mutually beneficial trade dynamic.
| Parameter | Details |
|---|---|
| Annual TRQ quantity | 200 tonnes |
| CEPA concessional duty | 1% (basic customs duty) |
| Standard MFN duty | 12.5% (basic customs duty) |
| Duty saving per kg | Approx. Rs 4.5-5 lakh per kg at current gold prices |
| Administered by | DGFT (Directorate General of Foreign Trade) |
| Origin requirement | Refined or substantially processed in UAE |
| Eligible importers | Nominated agencies and qualified jewellers with TRQ allocation |
Rules of Origin and the COO Process
Rules of Origin (ROO) are the criteria that determine whether a product qualifies as "originating" in India (or the UAE) for the purpose of claiming CEPA preferential tariffs. Without meeting the ROO, your goods will be assessed at standard MFN duty rates even if you have a Certificate of Origin in hand.
Under the India-UAE CEPA, a product qualifies as originating in India if it meets one of the following criteria:
Origin criteria under CEPA
- Wholly obtained or produced. Goods entirely grown, harvested, extracted, or manufactured in India with no foreign inputs (e.g., Indian-grown basmati rice, Indian-mined gemstones).
- Change in Tariff Classification (CTC). Goods manufactured in India using imported raw materials, where the manufacturing process results in a change in the HS code at the specified level (typically chapter, heading, or sub-heading level).
- Regional Value Content (RVC). Goods where at least 35-40% of the FOB value is attributable to domestic (Indian) content, including raw materials, labour, and factory overheads. The exact threshold varies by product category.
- Product-Specific Rules (PSR). For certain sensitive products, CEPA specifies custom origin rules that may combine CTC and RVC requirements or add specific processing requirements.
The Certificate of Origin (COO) is the document that proves your goods meet the CEPA Rules of Origin. In India, COOs for CEPA are issued electronically through the DGFT's online portal at coo.dgft.gov.in . The process has been fully digitised. No paper applications, no physical visits to DGFT offices.
The COO application requires you to specify the HS code of the exported product, the applicable CEPA rule of origin (CTC, RVC, or PSR), and upload supporting documents including the commercial invoice, packing list, and a bill of materials (BOM) showing the origin of inputs. For RVC-based claims, you will also need to provide a cost breakdown demonstrating that domestic value addition meets the required threshold.
COOs are typically issued within 1-2 working days of application. The digital COO is transmitted electronically to UAE customs, but you should also carry a printed copy with your shipping documents as a backup.
UAE as a Re-Export Hub: Jebel Ali and Rules of Origin
The UAE (and specifically the Jebel Ali Free Zone in Dubai) is one of the world's largest re-export hubs. Roughly 30% of goods imported into the UAE are re-exported to other countries in the GCC, Africa, and the CIS region. This re-export economy creates both opportunities and compliance risks for Indian exporters under CEPA.
The opportunity is clear: Indian exporters can use the UAE as a distribution hub for the wider Middle East and Africa region. Goods manufactured in India, shipped to a UAE warehouse or distributor, and then re-exported to Saudi Arabia, Oman, or Kenya benefit from the UAE's superior logistics infrastructure, its position as a regional trading hub, and the existing distribution networks of UAE-based trading houses.
For Indian exporters selling to UAE-based re-exporters, there is a critical compliance point: if you are asked to ship goods directly to a third country via a UAE free zone, with the goods never clearing UAE customs, then CEPA benefits do not apply because the goods were not technically imported into the UAE. The CEPA preferential rate is a UAE import duty concession. It only applies when goods actually enter the UAE customs territory.
Conversely, Indian exporters who import raw materials or components from the UAE need to be aware of the reverse scenario. If a UAE supplier is re-exporting goods that originated in China or elsewhere, those goods do not qualify for CEPA preferential rates into India unless they underwent substantial transformation in the UAE that satisfies the CEPA Rules of Origin. The Jebel Ali Free Zone, while excellent for logistics, does not confer UAE origin on goods that are merely stored, repackaged, or relabelled there.
Key points on Jebel Ali and CEPA
- Goods must clear UAE customs (not just enter a free zone) for CEPA import duty benefits to apply.
- Simple operations like repackaging, sorting, labelling, or breaking bulk do not constitute substantial transformation for origin purposes.
- If your UAE buyer re-exports your goods to a third country, the CEPA duty benefit is already captured at the UAE import stage. No additional benefit flows to the third country.
- Verify that your UAE supplier's Certificate of Origin is backed by actual manufacturing or refining in the UAE, not just warehousing in a free zone.
How to Claim CEPA Benefits: Step by Step
Claiming CEPA preferential tariffs is not automatic. You need to follow a specific process for each shipment. Here is the end-to-end workflow from preparation to duty savings:
| Step | Action | Details |
|---|---|---|
| 1. Verify eligibility | Check the CEPA tariff schedule | Look up your product's HS code in the India-UAE CEPA tariff schedule (available on the DGFT website) to confirm the CEPA preferential rate and applicable Rule of Origin |
| 2. Ensure origin compliance | Document domestic value addition | Prepare a bill of materials (BOM) and cost sheet showing that your product meets the applicable origin criteria (wholly obtained, CTC, or RVC of 35-40%) |
| 3. Register on DGFT portal | Create an account at coo.dgft.gov.in | One-time registration using your IEC (Import Export Code). Link your digital signature certificate (DSC) for signing COO applications |
| 4. Apply for COO | File COO application online | Submit the application with invoice, packing list, BOM, and origin declaration. Specify the CEPA rule of origin your product satisfies |
| 5. Receive COO | Download the digital COO | Typically issued within 1-2 working days. The COO is electronically transmitted to UAE customs. Print a copy for your shipping documents |
| 6. Ship with COO reference | Include COO details in shipping bill | Mention the COO number and CEPA preference in your shipping bill filed with Indian customs. Your CHA should mark the shipment as a CEPA preferential export |
| 7. UAE import clearance | Importer presents COO to UAE customs | Your UAE buyer or their customs broker presents the COO at the time of import clearance to claim the CEPA preferential duty rate instead of the MFN rate |
Bilateral Trade Growth Post-CEPA
The trade data since CEPA came into effect in May 2022 shows a clear impact on India-UAE bilateral trade. While global trade patterns were affected by post-pandemic supply chain adjustments and energy price fluctuations, the CEPA-specific trends are encouraging for Indian exporters.
| Metric | Pre-CEPA (FY 2021-22) | Post-CEPA (FY 2023-24) |
|---|---|---|
| Total bilateral trade | USD 72.9 billion | USD 83.6 billion |
| Indian exports to UAE | USD 28.3 billion | USD 35.6 billion |
| Indian imports from UAE | USD 44.6 billion | USD 48.0 billion |
| Gems & jewellery exports | USD 7.8 billion | USD 10.2 billion |
| COOs issued under CEPA | N/A | Over 1,00,000 annually |
Indian exports to the UAE grew by over 25% in the first two full years after CEPA came into effect. While not all of this growth is directly attributable to CEPA (energy prices and other macro factors played a role), the growth in non-oil exports (particularly gems and jewellery, textiles, and engineering goods) is strongly correlated with the new tariff concessions.
The number of COOs issued through the DGFT portal has grown rapidly, crossing 100,000 annually by FY 2023-24. This indicates that Indian exporters are increasingly aware of and actively claiming CEPA benefits. However, industry estimates suggest that a significant portion of eligible exports still do not claim CEPA preferences, leaving duty savings uncaptured. Often because smaller exporters are unaware of the process or find it cumbersome.
Services Provisions: IT, Healthcare, and Professional Services
While the tariff concessions on goods get the most attention, the CEPA's services chapter is equally significant for Indian exporters of services. The UAE has committed to providing market access and national treatment to Indian service providers across 11 broad service sectors and over 100 sub-sectors , covering areas where India has strong competitive advantages.
Key services sectors covered under CEPA
- IT and IT-enabled services (ITeS). Indian IT companies can establish commercial presence in the UAE and supply services cross-border with enhanced market access commitments.
- Healthcare and medical professionals. Recognition of Indian medical qualifications and eased requirements for Indian doctors, nurses, and healthcare workers to practice in the UAE.
- Accounting and auditing. Indian chartered accountants and audit firms can provide services in the UAE under CEPA commitments.
- Architecture and engineering. Mutual recognition provisions for Indian architects and engineers to provide professional services in the UAE.
- Education and training. Indian educational institutions can establish campuses in the UAE with preferential treatment.
- Financial services. Enhanced access for Indian banks, insurance companies, and fintech firms to operate in the UAE market.
A particularly important provision for Indian services exporters is the commitment on Mode 4 (movement of natural persons) . The UAE has agreed to facilitate easier entry and temporary stay for Indian business visitors, intra-corporate transferees, and contractual service suppliers. This is critical for IT companies that deploy engineers on-site at UAE client locations and for healthcare providers that send medical professionals to UAE hospitals.
For IT services specifically, the CEPA includes commitments on digital trade and data flows that are relevant for Indian companies providing cloud computing, data analytics, and software development services to UAE clients. The agreement includes provisions on cross-border data transfer, electronic signatures, and paperless trading that reduce regulatory friction for digital service delivery.
Complete country guide
Exporting to the UAE: The Full Guide
CEPA tariff benefits are just one part of exporting to the UAE. For the complete picture (customs procedures, documentation requirements, payment terms, labelling standards, and market entry strategies) read our comprehensive UAE export guide.
Read the full UAE export guide →
Frequently Asked Questions
What is the India-UAE CEPA and when did it come into effect?
The India-UAE Comprehensive Economic Partnership Agreement is a bilateral free trade agreement signed on 18 February 2022 and effective from 1 May 2022. It is India's first bilateral FTA in over a decade. The agreement covers trade in goods, services, investment, intellectual property, government procurement, and digital trade. The UAE offers preferential tariff rates on over 97% of its tariff lines covering Indian exports.
How do I get a Certificate of Origin to claim CEPA duty benefits?
Register on the DGFT's online portal at coo.dgft.gov.in using your IEC. File a COO application for each shipment specifying the HS code and applicable CEPA Rule of Origin. Upload supporting documents (invoice, packing list, BOM). The COO is typically issued within 1-2 working days. Present it to UAE customs at import clearance for the preferential duty rate to apply.
What is the gold TRQ under India-UAE CEPA?
The CEPA includes a Tariff Rate Quota allowing import of up to 200 tonnes of gold per year from the UAE at 1% customs duty, compared to the standard MFN rate of 12.5%. The TRQ is administered by DGFT. The gold must be refined or substantially processed in the UAE. Gold merely transshipped through the UAE does not qualify.
Can goods re-exported through Jebel Ali Free Zone qualify for CEPA benefits?
Goods that are merely transshipped, warehoused, or repackaged in Jebel Ali or any UAE free zone without undergoing substantial transformation do not qualify for CEPA preferential tariffs. The Rules of Origin require that goods be wholly obtained in the exporting country or undergo sufficient processing that results in a change in tariff classification or meets the specified value addition threshold (typically 35-40%). Simple operations like repackaging, relabelling, or sorting do not constitute substantial transformation.
Update history
- First published.