India-UAE CEPA explained: what Indian exporters are actually saving

The India UAE CEPA trade agreement is the reason many Indian exporters now pay less customs duty when their goods enter the UAE. CEPA stands for Comprehensive Economic Partnership Agreement, and it has been in force since 1 May 2022. For an exporter, the practical effect is narrow and specific: a given product, on a given tariff line, either gets a lower duty rate in the UAE or it does not, depending on what was agreed for that exact category.

This post stays on that question: what the agreement changed, what an exporter actually saves, and what it does not touch. It does not cover UAE company formation in detail – for the step-by-step process of setting up in Dubai, see the complete roadmap for business setup in Dubai from India, which this post links to where a UAE presence becomes genuinely relevant.

What the India-UAE CEPA changed

CEPA is broader than a standard free trade agreement. Alongside tariffs on goods, it also covers services, investment, government procurement, intellectual property and digital trade, and it was India’s first such comprehensive agreement with a country in the Middle East and North Africa region (Ministry of Commerce and Industry, PIB Backgrounder, 27 February 2026). It was signed in 2022 and entered into force on 1 May 2022 (UAE Ministry of Economy and Tourism; Government of India).

The two countries set an ambition, at signing, of raising bilateral trade in goods to USD 100 billion within five years. Bilateral trade actually surpassed USD 100 billion in FY 2024-25 (Ministry of Commerce and Industry, PIB Backgrounder, 27 February 2026). On the export side specifically, India’s non-oil exports to the UAE reached USD 27.4 billion in FY 2023-24, growing at an average of 25.6% a year since CEPA took effect. Electrical machinery and equipment, chemicals, and smartphones – which alone accounted for USD 2.57 billion of exports to the UAE that year – were named by the Ministry as the sectors that gained the most (same source).

That growth reflects several things happening together – CEPA, a wider rise in Indian companies registering in Dubai, and general trade expansion – so it would overstate the case to credit the tariff cuts alone for all of it. What CEPA specifically contributed is the tariff schedule below.

What Indian exporters may actually save

Duty savings by product category

Under CEPA, the UAE sorted its 7,581 tariff lines into four groups: immediate elimination, phased elimination over 5 years, phased elimination over 10 years, and an exclusion list. Officially, the UAE eliminated duty immediately on 80.3% of its tariff lines on 1 May 2022. A further 14.4% of lines (1,089 products) are being phased to zero over 5 years and 2.4% (180 products) over 10 years. A small remainder, 0.5% (35 products), gets only a partial cut of up to 50%, and 2.4% (187 products) stayed outside the deal entirely (Ministry of Commerce and Industry / NSEZ official CEPA FAQ, 2022). Altogether this covers 99% of India’s exports to the UAE by value, though not every individual product on every line benefits equally or immediately.

The same official source puts a number on the saving: about USD 26 billion worth of Indian products had faced a roughly 5% UAE import duty before CEPA. That is the realistic scale of what most exporters gain – a single-digit percentage cut on the specific goods that qualify, not a blanket removal of cost. Sectors named as getting immediate zero-duty access include gems and jewellery, textiles, leather, footwear, sports goods, plastics, furniture, agricultural and wood products, engineering goods, pharmaceuticals, medical devices and automobiles.

Product category	UAE tariff treatment under CEPA	What to verify before you rely on it
Gems and jewellery	Immediate zero duty; origin rule eased to a lower value-addition threshold for this sector	Certificate of Origin issued under the sector’s reduced value-addition rule
Textiles, leather, footwear	Immediate zero duty for most lines	Standard origin rule: minimum value content plus a change in tariff classification
Pharmaceuticals	Immediate zero duty, plus a dedicated Annex fast-tracking UAE registration for products already approved by USFDA, UK MHRA, EU EMA or Japan’s PMDA	Regulatory dossier for the fast-track route, plus origin proof
Engineering goods, chemicals, electrical machinery	Immediate zero duty for most lines; named by the Ministry of Commerce as among the biggest export gainers	Standard origin rule
Steel	Duty benefit subject to a stricter “melt and pour” origin rule	Proof that melting and casting happened in India
Roughly 2.4% of UAE tariff lines (assorted categories)	Kept outside the agreement; standard duty still applies	Confirm your product is not on this list before assuming a saving

Market access beyond the tariff line

Two provisions matter beyond the headline duty cut. First, a dedicated Pharmaceuticals Annex – the first of its kind in any Indian trade agreement – lets Indian pharma products already approved by a recognised regulator (the US FDA, UK’s MHRA, EU’s EMA or Japan’s PMDA) get automatic registration and marketing authorisation in the UAE within 90 days, rather than a full fresh review. Second, the agreement’s own official guidance describes the UAE as a potential hub for sourcing Indian capital goods and intermediates for further value-added exports into Africa and Europe, which is a market-access and logistics benefit distinct from the tariff saving itself (Ministry of Commerce and Industry / NSEZ, 2022).

What CEPA does not remove

CEPA is a tariff and market-access agreement. It is not a general exemption from trade compliance, and a few things stay exactly as they were:

• Not every product benefits. The 2.4% of UAE tariff lines on the exclusion list, and the 0.5% getting only a partial cut, pay duty largely unchanged.
• UAE VAT is unaffected. CEPA concerns import duty only. The UAE’s VAT still applies at the point of sale or import regardless of any CEPA tariff cut – see our separate guide to VAT registration in the UAE for what that involves.
• Customs checks and paperwork continue. A shipment without a valid Certificate of Origin is treated like any non-CEPA import and pays the standard duty. Origin claims can also be verified by customs authorities after the goods have already moved.
• The rate is not permanently locked in. CEPA includes a permanent bilateral safeguard mechanism: if imports of a particular product surge suddenly enough to threaten domestic industry, either country can restore the pre-CEPA duty rate for that product.
• This is not customs, tax or legal advice. Confirming your product’s exact tariff line, origin position and documentation needs is a job for a customs broker or trade consultant, not a blog post.

How rules of origin decide whether the saving applies to you

A lower tariff line means nothing if the shipment cannot prove it qualifies. CEPA’s general rule is that a product must either be wholly obtained in India, or – where it uses imported (non-originating) inputs – meet two conditions together: a minimum qualifying value content, generally 40% on a Free on Board basis, and a change in the tariff classification of those non-originating inputs at the 4-digit or 6-digit HS code level.

Two sectors negotiated their own variations. Gems and jewellery gets a lower value-addition threshold, reflecting how little of that sector’s finished value typically comes from processing versus the imported raw material. Steel gets the opposite treatment – a stricter “melt and pour” requirement, meaning the raw steel must actually be melted and cast into its first solid state in India, not merely finished or assembled there (Ministry of Commerce and Industry / NSEZ, 2022).

A Certificate of Origin is what carries this proof with the shipment, and UAE customs uses it to decide whether to apply the CEPA rate or the standard one. The exporter needs to be able to show the HS codes and value of any non-originating materials used, since origin can be checked after the goods have already landed. In practice, two exporters selling what looks like an identical product can end up with different duty outcomes purely because they source components differently – the rate is not automatic, it is documented.

When a UAE or Dubai business setup becomes relevant

Worth being precise here: the CEPA duty saving on a shipment applies regardless of who owns the exporting company. An Indian company exporting directly from India, with no UAE entity at all, gets the same tariff treatment as one that owns a UAE subsidiary, provided the goods and paperwork meet the same origin rule. Setting up in the UAE is not a requirement for claiming the tariff benefit.

Where a UAE presence does help is separate from the tariff question. Some exporters want to invoice regional buyers locally, hold stock closer to customers, or use the UAE as the sourcing and re-export base its own official guidance describes for reaching Africa, the wider Gulf and Europe. Worth being precise on geography too: CEPA is a UAE federal agreement, so the tariff treatment does not change depending on which emirate a company is based in – Dubai is simply the most common starting point for Indian founders, not the whole of the UAE.

If a UAE presence does make sense for your business, an Indian resident investing in a UAE company still has separate obligations back home – the investment is classified as Overseas Direct Investment under FEMA, with its own filing and reporting requirements regardless of any CEPA benefit. Our guide to FEMA compliance for a UAE company covers that side in full.

A practical checklist before claiming CEPA benefits

1. Confirm your product’s exact HS code, then check whether it sits in the immediate-elimination, phased-elimination, phased-reduction, or exclusion list.
2. Identify which rule of origin applies – the general value-content-plus-tariff-shift rule, or a sector rule such as gems and jewellery’s lower threshold or steel’s melt-and-pour requirement.
3. Arrange a valid Certificate of Origin for the shipment before the goods move, not after.
4. Keep the underlying records – invoices, and the HS codes and values of any non-originating inputs – since origin can be verified after the shipment has landed.
5. Confirm UAE VAT treatment and any India-side export compliance separately; CEPA duty relief covers neither.
6. Decide whether a UAE company is actually useful for your business model as its own question – the tariff saving applies with or without one.

If CEPA makes the UAE a more practical market for your products, you may also need to decide whether a UAE presence makes sense for distribution, invoicing or local operations. You can explore myHQ’s UAE business setup support to compare free zone and mainland routes before choosing a structure. myHQ supports company formation; confirm tariff classification, rules of origin, Certificate of Origin requirements and customs treatment with a customs broker or trade consultant.

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