India-U.A.E. CEPA: Pharma Product Tariff Cut, No Free Access To Energy Resources
Tariff on finished pharmaceutical products and certain other biological products has been eliminated with immediate effect.
India’s free-trade pact with the United Arab Emirates eliminated tariffs on finished pharmaceutical products but restricted access to the gulf nation’s energy resources.
“The parties (India and UAE), while recognising that there are differences between their healthcare systems, share a commitment to facilitate access of finished pharmaceutical products, and certain marketed biological products for human use, collectively referred to as ‘pharmaceutical products’, as a means of continuing to improve the health of their populations,” the document on India-U.A.E. Comprehensive Economic Partnership Agreement said.
Tariff on finished pharmaceutical products and other items such as waste pharmaceuticals, enzymes for pharmaceutical use other than streptokinase, and pharmaceutical glassware has been eliminated with immediate effect. Glands and products of wild animals used in pharmaceutical preparations; leaves, powder, flowers and pods used in pharmacy or as agrochemicals; pharmaceutical grade kaolin, among others, will witness phased tariff removal in the next five years.
Tariff on these items ranges from 10-30%.
Human blood, human plasma, human tissues, and organs have also been excluded from this.
According to the document on the commerce ministry website, India and the U.A.E. will accept the pharmaceutical products manufactured in either countries, without the need for prior inspection, provided that these are approved by the regulatory authorities of Australia, Canada, European Union, Japan, the U.S. or the U.K.
“Each party, however, has a right to conduct its own inspection of the manufacturing facilities approved by the regulatory authorities… The party’s own inspection shall be an exception from the normal practice…,” the document said. Both countries will also be able to exchange any information necessary for mutual recognition of inspections.
India has exported pharmaceutical products worth Rs 1,197.5 crore to the UAE so far in the ongoing fiscal compared with Rs 1,774.3 crore a year ago. The country has imported pharmaceutical products worth Rs 21.2 crore from the U.A.E. so far in 2021-22.
“India has largely been an exporter of pharmaceutical products and this facilitation will help from a trade perspective as well. Indian pharma companies have made GCC (Gulf Corporation Countries) an important area and this will further boost growth,” said Sujay Shetty, global health industries advisory leader at PwC.
The trade pact also mentioned that both countries establish “fast-track” procedures for approval of pharmaceutical products from at least one of the regulatory authorities of Australia, Canada, EU, Japan, the U.S., or the U.K.
On test results from accredited laboratories, the document said, “The regulatory authority of the importing party shall accept tests conducted by the testing laboratories accredited by the exporting country’s national accreditation body and approved by the regulatory authority of the importing party.” The importing country, it said, may conduct an additional test, if necessary, in line with its domestic regulations.
Energy Resources
A letter from the UAE, available on the commerce ministry website, stated that India would not be granted any rights with regards the energy sector.
“The agreement shall not grant any rights to India or create any obligations for the UAE or any of its member emirates with regard to the energy resources sector. Accordingly, the energy resources sector is excluded from all aspects and provisions of the agreement.” But in case the UAE grants any such rights to a third country, “such rights shall be granted to India”.
A letter from the India’s Commerce Minister Piyush Goyal acknowledged.
“India-U.A.E. bilateral trade has steadily increased to Rs 4.55 lakh crore in FY2019-20, making the UAE India’s third-largest trading partner,” the commerce ministry said in a statement on Monday. “Indian imports from the UAE were valued around Rs 2.2 lakh crore, including import of 21.83 million tonnes of crude oil.”
The UAE is an important source of India’s energy supply and a key partner of India in the development of strategic petroleum reserves, upstream, and downstream petroleum sectors, the statement said.