In the first two months after the India-UAE free trade agreement went into effect in May and June, an increase in imports of gold and oil caused India’s trade deficit with the United Arab Emirates to grow fourfold.

The two-month period saw an increase in the nation’s trade deficit with the UAE from $980 million to $3.92 billion.

Most India’s exports, in contrast to its imports, were value-added and completed products including textiles, gems and jewellery, equipment, footwear, and automobiles.

According to Arpita Mukherjee, a professor at ICRIER, a think tank for economic policy, the growing trade deficit is not a huge issue because India imports most of its raw materials from the UAE.

Searching the globe for raw materials and energy supplies to fuel their industries and propel economic expansion are nations like China, the US, and India.

For instance, China’s expansive Belt and Road Initiative, or BRI, intends to create numerous trade routes to ensure energy and the supply chains for factories.

In that regard, the trade agreement with the UAE, a big market and important energy source, may benefit India in the long run.

While exports of footwear soared 73% in May, those of gems and jewellery increased by 33 per cent , ready-made textiles by 42 per cent , tea, coffee, and spices by 50 per cent , and vehicles by 192 per cent.

UAE’s percentage of all exports from India decreased from 7.2 per cent in April to 6.9 per cent in the quarter that ended in June. 6.65 per cent of all exports in FY22 came from the UAE, representing a 68 per cent increase.

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In terms of imports, the UAE represented 7.31% of all imports into India in FY22, a 68% increase.