What does the recent India-UAE economic agreement mean for Indian fintech?

India and UAE signed a Comprehensive Economic Partnership Agreement (CEPA) effective May 1, 2022.

Will this bring opportunities for cross-border payments? How will it impact the fintech industry in India and MENA? Let's find out!

First, some context...

The CEPA is the first comprehensive and complete Free Trade Agreement in the MENA region. It is a bilateral covenant that minimizes tariffs and eliminates the red tape associated with trade & services. Under this agreement, Indian service providers will have access to over 110 sub-service sectors in the UAE market, including business services, financial services, travel-related services, and more.

Advantages of CEPA
  • Access: This agreement will expand India's trade share in the Gulf region. Leveraging UAE's formidable transport and logistics infrastructure, Indian service providers can tap into MENA markets.

  • Trade Opportunities: India can now access over 90% of UAE's preferential market.

  • FDI & FPI: The agreement will accelerate Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) inflow from UAE into India. This will open new markets for several sectors.

  • Cooperation & Collaboration: The CEPA will enable countries to collaborate on critical technologies and mutually promote e-business/digital payment solutions.

Opportunities for fintech

The CEPA can potentially usher in a new frontier in cross-border payments and remittances.

Building robust, interoperable digital payment solutions is crucial for processing real-time transactions. However, empowering simple, cost-effective, and secure transactions requires inclusive access to critical technologies, new investments, and domestic resolution. This is what CEPA can do!

CEPA can build an open and equitable ecosystem for cross-border business in financial and insurance services. Both countries can reap development opportunities by strategically employing CEPA in their trade systems.

The agreement is fairly new, so we will be monitoring how the fintech community in India and MENA responds to this and of course, we will keep you posted!

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Clearly, cross-border payment's upward trajectory will lead to higher financial inclusion.

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That's it for now. See you again soon with all the need-to-know fintech updates!

Stay tuned. Stay curious.