Explained: How India–UAE CEPA Can Mitigate Trump Tariffs

In Business
October 1, 2025
Pankaj Gupta
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India–UAE CEPA is emerging as a shield against Trump tariffs. By using UAE’s re-export system, joint ventures, and INR–AED settlement, India can protect exporters while advancing its $100 billion non-oil trade vision

New Delhi (ABC Live): The India–UAE CEPA is widely recognised as a landmark trade agreement signed in 2022. While it was designed to boost bilateral trade, today it also serves another purpose: helping India mitigate the impact of Trump tariffs. By strengthening India’s market access and leveraging the UAE’s role as a re-export hub, CEPA has become both a growth driver and a protective shield in a turbulent global economy.

Trump Tariffs and India’s Export Challenge

The U.S., under Donald Trump, has imposed punitive tariffs on multiple Indian sectors, including steel, aluminium, textiles, and pharmaceuticals. These tariffs increase costs, erode competitiveness, and challenge India’s long-term export goals. However, the India–UAE CEPA offers India a strategic alternative to soften the blow.

How India–UAE CEPA Acts as a Shield

1. UAE as a Re-Export Hub

The India–UAE CEPA allows Indian goods shipped to UAE free zones like Jebel Ali to undergo light processing, packaging, or relabeling. Once re-exported, these products may qualify as UAE-origin goods, thereby bypassing direct tariff disadvantages in the U.S.

2. Joint Ventures in UAE Free Zones

Under the India–UAE CEPA, Indian firms can establish joint ventures in the UAE’s free zones. Goods produced or assembled there can enter the U.S. under UAE-origin status, reducing tariff exposure.

3. INR–AED Local Currency Settlement

The local currency settlement mechanism under the India–UAE CEPA reduces dollar dependence, shielding exporters from exchange rate volatility that often worsens during tariff disputes.

4. Sector-Specific Cushioning

Pharma: Faster approvals via the Emirates Drug Establishment.
Textiles: Blended production in the UAE lowers tariff risk.
Food & Agritech: Rice, spices, and tea gain premium branding when repackaged in the UAE.
Renewables: Joint solar and hydrogen projects under CEPA expand tariff-resilient exports.

Sector-Wise CEPA Cushion Against Trump Tariffs

Sector	Trump Tariff Risk (U.S.)	CEPA Mitigation via UAE
Steel & Aluminium	High duties since 2018	Re-export via UAE free zones
Textiles & Apparel	Tariffs on cotton, apparel	Duty-free CEPA access; UAE-origin re-export
Pharma	FDA scrutiny, tariff risk	CEPA fast-track approvals + UAE certifications
Food & Agri	NTBs on rice, spices	UAE repackaging + premium branding
Renewables	Solar equipment tariffs	CEPA-driven joint UAE manufacturing

Legal and Policy Framework

The India–UAE CEPA is rooted in Article 246 of the Constitution and implemented through the Foreign Trade (Development & Regulation) Act, 1992 and Customs Act, 1962. Its dispute settlement mechanisms align with India’s commercial law reforms, making CEPA not just an economic tool but also a legal safeguard against global trade shocks.

Editorial Note

At ABC Live, we emphasise that the India–UAE CEPA is more than a bilateral trade pact. It represents India’s ability to adapt to global uncertainty. By using the UAE’s re-export capacity, investment inflows, and trade facilitation, CEPA ensures India can withstand Trump tariffs while expanding its export base.

Why ABC Live is Publishing This Now

Return of Tariff Risks: With Donald Trump back in power, tariff measures against India are again on the global agenda. Exporters in steel, textiles, and pharma face heightened uncertainty.
Fresh CEPA Review: Just days ago, India and the UAE reaffirmed the $100 billion non-oil trade target. The timing makes it crucial to assess CEPA’s protective role.
Policy Urgency: As India pushes toward a $5 trillion economy by 2027, understanding how CEPA safeguards exports is vital for policymakers and businesses.

What Makes This Report Unique

Strategic Framing: While others highlight CEPA’s trade targets, this report explains how it can act as a shield against Trump tariffs.
Sectoral Depth: We provide a before–and–after analysis and show which industries benefit most under CEPA when tariffs rise.
Legal-Policy Insight: Unlike daily news, this report situates CEPA within India’s constitutional and trade law framework, showing how it works in practice.
South–South Lens: We position CEPA not only as bilateral trade but also as part of India’s gateway strategy through UAE into Africa, Europe, and the Middle East.