The ground-breaking trade deal between United Arab Emirates (UAE) and India signed as a Comprehensive Economic Partnership Agreement (CEPA) in the name of free trade, marks India’s first trade agreement with a major trading ally in over a decade. CEPA also involves the launch of the India – UAE startup bridge; an initiative which sets the stage for investments coming from the UAE towards Indian startups. Golden Brokers continues in analysis of how the deal might influence economies in the region.
The bridge will provide UAE with India’s seasoned expertise, as well as provide India a monetary boost to startups forming in the UAE. Indian Commerce and Industry Minister Piyush Goyal stated lately that there’s a significant number of startups emerging in the United Arab Emirates, with over 65,000 startups and 100 unicorns registered with the ministry. This will create more jobs and attract larger investments in many industries, including financial services, industrial production, food security, logistics and entrepreneurship.
Recently, the Memorandum of Understanding (MoU) linked for this deal notes that a minimum of 50 startups from India & the UAE will be selected over the next 5 years, with the goal of growing at least 10 startups into unicorns by 2025. This will set up a buoyant ecosystem for startups, corporations, investors and entrepreneurs to reinforce their position in the international market.
On the other hand, Golden Brokers points out that the feasibility of the free-trade agreement is challenged by several factors. Mainly, global macroeconomic instability, market volatility & rising consumer prices pose a challenge to the effective execution of the agreement and the achievement of desired results. Should complications loom further, the fruits of the FTA may be diminished. Recently, investors have been reluctant to embark on risky journeys, and startups are characterized as high-risk, high-reward investment opportunities.
Despite that, the two nations are effectively combating the contemporary adverse market conditions via this deal. From a macroeconomic viewpoint, this free-trade agreement will aid the two nations in retaliation against a potential upcoming global recession.
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