A WhatsApp message arrived at 6.40 on a Sunday morning from a garment maker in Tiruppur. "Sir, my buyer in Sharjah says CEPA makes my shirts duty free. True? And does it help me sell to Saudi and Kenya too?"
Half true, I replied. The duty part is true if your paperwork is right. The Saudi and Kenya part needs a UAE company.
Where the agreement stands in 2026
The India-UAE Comprehensive Economic Partnership Agreement entered into force on 1 May 2022. In the financial year 2025-26, bilateral merchandise trade reached USD 101.25 billion, the second year running above USD 100 billion, Commerce Minister Piyush Goyal said on 1 May 2026. India's exports to the UAE were USD 37.36 billion, up about 2 per cent, and imports were USD 63.89 billion.
Non-oil trade was USD 37.6 billion in the first half of 2025 alone, up 33.9 per cent year on year, Arabian Business reported. The two governments have set a target of USD 100 billion in non-oil, non-precious-metals trade by 2030, and in May 2026 officials spoke of USD 200 billion in total trade by 2032.
The Commerce Ministry recorded 122,036 preferential certificates of origin issued under the agreement in 2024-25, up from 98,104 the year before.
What the tariff cut actually covers
The UAE committed to eliminate duties on more than 97 per cent of its tariff lines, which cover about 99 per cent of Indian exports by value. Most of that was zero from day one, with 7,694 lines duty free at entry into force and 2,401 lines phasing down over five to ten years. The UAE's standard import duty is 5 per cent of customs value under the GCC common tariff, so for most goods CEPA turns 5 per cent into zero.
A few lines are excluded or treated differently. Gold jewellery got tariff elimination; some silver and other jewellery articles did not, Bloomberg Quint reported.
Ten product lines with a real advantage
Based on sectors named by the Indian government and the agreement's schedules:
- Gold jewellery and cut and polished diamonds
- Textiles and ready-made garments
- Leather goods and footwear
- Pharmaceuticals and medical devices
- Processed food, spices and agricultural products
- Engineering goods and machinery parts
- Auto components
- Plastic products
- Furniture and wood products
- Handicrafts and other labour-intensive goods
Gems and jewellery deserve a note. India's total gem and jewellery exports fell in 2025-26 to about USD 27.7 billion under pressure from US tariffs, yet the UAE was one of the markets that grew, according to GJEPC data reported in June 2026.
Why a UAE entity, not just a UAE buyer
CEPA removes duty at the UAE border. A UAE company lets you do two further things.
First, you hold stock in a free zone, where goods sit outside the customs territory and duty is suspended until they move to the mainland or leave the country. Second, you re-export. The UAE's re-exports reached AED 830.2 billion in 2025, up 15.7 per cent, according to WAM. Goyal himself called the CEPA a "gateway to Africa" and to the wider GCC.
One point of honesty. Your shirts stay Indian in origin when they pass through the UAE. A re-export to Saudi Arabia pays Saudi duty; a re-export to Kenya pays Kenyan duty. The UAE's own CEPAs with Mauritius, Kenya, Gabon or Congo help UAE-origin goods. Those need UAE-origin goods, meaning light manufacturing or finishing here.
Rules of origin in plain words
For most industrial goods, two tests apply: the product must change tariff heading in India, and at least 40 per cent of its value must be added there. Agricultural goods generally must be wholly obtained in India. The certificate of origin comes from DGFT or an authorised export promotion council, and the UAE has run an online verification portal since March 2024.
A worked example, with made-up numbers
Take a Tiruppur consignment of cotton shirts worth USD 20,000 CIF Sharjah. These numbers are illustrative, not quotes.
Without CEPA, the UAE importer pays 5 per cent duty, USD 1,000. With a valid certificate, zero. If the exporter's margin on the order is 12 per cent, or USD 2,400, that USD 1,000 is more than 40 per cent of his profit.
Now add a UAE entity. He lands 2,000 shirts, sells 1,200 to UAE retailers duty free, and re-exports 800 to a Nairobi wholesaler from the free zone within three weeks, with no UAE duty on the outbound leg. Same stock, two markets, one shipment from India.
What this means for you
Think about your own order book. If your buyers in the Gulf and Africa are all served by separate shipments from India, you pay freight several times and hold no stock near the customer. In my experience, the exporters who gain most are the ones with repeat buyers and mid-value goods: garments, components, packaged food, not one-off project cargo.
One honest caution
CEPA preference is lost on paperwork. A certificate with the wrong HS code, a value-addition sheet you cannot back up, or a mismatch between invoice and certificate can mean duty, penalties and delays. Budget for a customs broker who knows the schedule, and keep one person in your firm responsible for origin records.
Your next step: list your top three HS codes and check each against the CEPA schedule this week. Then tell me in the comments which product line you are in. In a coming post I will walk the same UAE entity's container to Lagos and Mombasa.
This article is general information, not legal, tax or investment advice.
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