In recent years, the United Arab Emirates (UAE) has emerged as a lucrative market for Indian companies aiming to expand their business. With a highly diversified and open economy, the country has a strong focus on international trade and commerce, making it an attractive destination for foreign investors. The UAE boasts of strong infrastructure, a stable political system, and a trade regime being the most liberal in the Gulf region. Despite the dominance of the oil industry in the country’s economy, the Government is striving to reduce its reliance on this sector and establish a diversified economy that is adaptable to new economic models and can leverage global economic partnerships.
Furthermore, with bilateral trade expected to reach a staggering USD 100 billion by 2030, the business corridor between UAE and India is flourishing.
While the opportunities of trade are abundant in UAE, so are the complexities and managing the market dynamics, cultural nuances and export regulations can be overwhelming. Henceforth, understanding the ins and outs of the export process is crucial to successfully export in UAE. We have enlisted a guide that demystifies the process of export from India to UAE:
Compliance to Legal and Regulatory Framework
Acquiring Necessary Licenses
The UAE has established strict regulatory requirements for Indian manufacturers to procure before proceeding with the export process. First and foremost, Indian exporters are required to obtain an Importer Exporter Code (IEC) from the Directorate General of Foreign Trade (DGFT) which serves as the primary mode of identification and is a mandatory requirement. The IEC is a 10-digit code with a lifetime validity and can be applied for simply through the DGFT website.
Subsequently, to export from India to UAE, you are required to procure the following documents:
- Airway Bill: An Airway Bill (AWB) is a document that accompanies the goods shipped via international air courier and provides information about the shipment and helps to track it. The Airway Bill is issued by the air shipment carrier upon receiving goods that clear the custom formalities. The AWB is used as a contract of carriage between the airlines and the exporter.
- Commercial Invoice: It is a legal document used to process agreements in international trade. Being one of the most crucial documents, the Commercial Invoice is provided by the exporter in an international transaction and acts as evidence of sale between the parties involved. It generally contains information regarding quantity, price, value, etc.
- Pro forma Invoice: A pro forma invoice is an estimated invoice or preliminary bill, used to request payment from the committed buyer for the products/services that they purchased. It usually includes a description of the goods, the payable amount, and other details related to the transaction.
- Bill of Lading: A bill of lading is a crucial legal document that lists the terms of contract between the carrier and the shipper. The shipper receives this record from the transport company (carrier) and acts as ‘Evidence of Carrier’, i.e., proof of agreement between the two parties.
- Certificate of Origin: A Certificate of Origin (COO) is an integral legal document used in export trade and certifies that the products being exported are manufactured and processed in a particular country. In India, the documents required to obtain a Certificate of Origin are as follows
- Cover letter addressed to the Director General of Indian Chamber of Commerce (ICC)
- Filled Certificate of Origin form
- Packing List, Shipping Invoice and Letter of Credit stamped and signed by the applicant.
- PAN and IEC issued to the exporter.
- Relevant clearance certificate from the customs department stating that all necessary taxes and duties have been paid.
- Certificates of Inspection (if applicable): A Certificate of Inspection or an inspection certificate is a trade document issued by a third-party inspection company after conducting a thorough inspection of goods. It acts as a means of quality check in international trade transactions and is conducted by independent inspection companies.
- Product specific documents (if applicable)
All the original certificates must accompany every shipment at the time of entry. Exporters may even be allowed to send in their details directly to the bank. These certificates are only required for the shipment it is accompanied with since they only contain details pertaining to that shipment. Note that U.S. “State” issued export certificates are acceptable and no modifications to the certificates are allowed once it has been shipped with the accompanying product.
Navigating UAE Import Requirements
Once you secure the necessary licenses and legal documents, the next step is to comprehend the import requirements of UAE. The UAE has laid out specific quality standards and certificates for Indian manufacturers, that include labeling requirements, industry/product specific licenses and certificates, and other necessary permits. The specific certifications and requirements differ for each industry.
For instance, obtaining a Halal slaughter certificate issued by a UAE approved U.S. Islamic Centre and notarized by the UAE Embassy or a Consulate is mandatory for the import of food products.
Given the exhaustive list of mandatory documentation, gauging the specific requirements for your business can be a tedious process and seeking guidance from a professional can ensure a seamless export experience.
Customs and Trade Regulations
The UAE has implemented several trade policies and import regulations that favor companies and businesses in India. The UAE-India Comprehensive Economic Partnership Agreement (CEPA), is one such program that benefits India in the following ways:
- Preferential Tariffs: In accordance with the UAE- India CEPA, the customs duty on a substantial number of Indian goods will be eliminated or reduced significantly. The goods that fall under this bracket include gas, oil, petrochemicals, minerals, jewelry, agriculture, textiles, metals, and gems. For instance, jewelry had a UAE tariff of 5% before CEPA and owing to this free trade agreement, Indian businesses can now export jewelry to UAE tariff-free.
- Simplified Customs Process: The CEPA that India and the UAE signed include clauses that improve the effectiveness of customs processes. One such provision gives more clarity regarding the import criteria and restrictions for particular commodities by issuing customs rulings prior to import. This facilitates the import procedure for Indian businesses.
Other terms include sharing information and implementing best practices for international customs administration in order to lower trade costs and streamline trade by avoiding unnecessary terms and administrative requirements. Companies can save more money by lowering the amount of paperwork and bureaucracy associated with importing and exporting goods owing to these regulations. By doing this, they can prevent expensive interruptions in the supply chain.
Free Trade Zones: In addition to favorable trade policies, UAE also offers multiple free trade zones that benefit businesses as they provide optimal conditions for export. FYI, free trade zones are exempt from custom laws and rules, thereby aiding companies by potentially avoiding or deferring the incurring duties when they export their products to these zones. Furthermore, items destroyed in the free trade zones are free from any tax imposition. This helps companies that export fragile goods by providing substantial cost savings and avoiding any tedious customs duty procedure.
Comprehensive Guide to Export in UAE
Once you obtain the necessary licenses and legal documents required to export in UAE, you are all set to explore the gulf market and expand your business ventures.
Here are some key steps that Indian manufacturers must follow to successfully set up export in UAE:
- Market Research: The most crucial step of exporting in UAE is conducting thorough market research for your product. The UAE has a highly diversified and ever-expanding economy and as a business, you must investigate and identify the demand for your product in the UAE, with a focus on consumer behavior and preferences. According to a report published by Nielsen in 2023, the top three categories of consumer spending in the UAE are food and non-alcoholic beverages, housing, gas, electricity, water, and other fuels, and transportation. Other significant categories include restaurants and hotels, footwear and clothing, recreation, and culture. The report also highlights the increasing trend of online shopping in the UAE, particularly in the areas of electronics, clothing, and personal care products. Overall, the UAE has a high consumer spending rate, driven by the country's affluent population and high levels of disposable income.
- Finding Partners and Buyers: Partnering with the right distribution channels and buyers in the country is a crucial strategy for Indian businesses to delve into the UAE market. Establishing a strong network and opting for local distribution channels will help you gauge the cultural nuances and reach a wider customer base. Whether it’s a retailer, distributor, or agent, a local partner can provide invaluable insights into the UAE market. Finding a reliable partner can be managed by participating in business expos, industry seminars and trade expos. Meetings are often conducted face-to-face, and there is an emphasis on hospitality and building personal connections.
- Documentation: As stated hitherto, acquiring the necessary documentation is the backbone of exporting in UAE. It is crucial to acquire the product specific licenses since a missing or inaccurate document can lead to fines, delays, or even cancellations of export deals. For instance, obtaining a Halal slaughter certificate issued by a UAE approved U.S. Islamic Centre and notarized by the UAE Embassy or a Consulate is mandatory for the import of food products.
- Shipping and Logistics: Opting for the right international courier service is mandatory to ensure seamless export to the UAE. Various shipment documents such as Certificate of Origin, Commercial Invoice, a packing list including details such as HS code, weight and packing method, and Airway bill or bill of entry must be provided with the shipped products.
- Customs: Once shipped, the goods must clear the customs in UAE. As explained hitherto, this process comprises providing the necessary documentation and should be facilitated smoothly if the right legal process is followed.
- Payments and Currency: In matters of money, the preferred mode of payment for international trade are wire transfers, letters of credit (LC), and open accounts, dependent on the mutual trust between partners. Many businesses also accept payment through popular online platforms such as PayPal and Skrill. To prevent any financial hiccup, it is crucial for Indian businesses to discuss the terms of payment in advance.
- Marketing: To ensure success in the market, businesses must adapt to the cultural dynamics. One of the most effective ways to market in the UAE is through digital channels since the country has a high internet penetration rate, with a large number of people using social media platforms like Facebook, Instagram, and Twitter. Hence, businesses can leverage these platforms to target their audience. Another popular marketing strategy in the UAE is event marketing and the country is known for hosting various international events such as Dubai Expo 2020, Dubai International Film Festival, Dubai Air Show, and many more. These events provide an excellent opportunity for businesses to showcase their products and services to a large and diverse audience. Outdoor advertising, such as billboards, is also a prevalent marketing method in the UAE.
Conclusion
Among all the Arab nations, India and the UAE share the strongest bonds. For many years, India has been a top exporter of non-oil goods to the United Arab Emirates and India is the third-largest exporter to the country. As a result, the UAE is India's most preferred trading partner in the Gulf and Middle East.
Exporting goods from India to UAE unlocks immense potential for Indian businesses that plan to expand their horizons. The opportunities are abundant and complying with the legal framework, conducting market research, building a strong network, and performing meticulous planning, can lead to successful export in UAE’s economy.
We can assist you with concerns and processes related to exporting your products to the UAE. You can get in touch with us by submitting a query below.
