In August 2025, Indian exporters to the United States faced tariffs of up to 50%. By February 2026, following the India–US interim trade agreement, the headline reciprocal rate on Indian goods had fallen to 18%, and the additional penalty tariff linked to Russian crude purchases had been withdrawn.
That swing — in roughly six months — is the most useful thing that has happened to Indian exporters in the past two years, and not only for the obvious reason. Any business that restructured its supply chain in late 2025 purely to arbitrage a tariff gap found the premise of that restructuring substantially altered before the new entity was operational.
The lesson is not that international structuring is unwise. It is that the structure has to be justified by the business, not by the tariff schedule. Tariffs are the most volatile input in any cross-border plan; supply chain, customer proximity, inventory economics and origin are the durable ones.
India’s export support framework has matured in the same period, and the UAE has become more significant to Indian business than at any previous point. Both developments are real. This article sets out what they actually offer, and what an exporter should establish before acting on either.
Table of ContentsIndia’s Export Support Framework Has Expanded
The most significant development is the Export Promotion Mission (EPM), approved by the Government of India on 12 November 2025 with an outlay of ₹25,060 crore for FY 2025–26 to FY 2030–31.
The Mission brings export-support measures within two programmes:
* **Niryat Protsahan** — financial support, including trade finance, export factoring, collateral guarantees, credit enhancement and credit facilities for e-commerce exporters; and
* **Niryat Disha** — non-financial support, including export quality and compliance assistance, international branding and packaging, trade fair participation, export warehousing and logistics, inland transport reimbursement, and trade intelligence.The framework is particularly relevant to MSMEs, first-time exporters and businesses entering new markets.
This matters because export competitiveness is no longer determined by manufacturing cost alone. Certification requirements, shipping costs, working-capital cycles, overseas warehousing and market-entry expenditure can each determine whether an exporter succeeds in a new jurisdiction.
Remission Schemes: Check the Position at the Date of Shipment
The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme continues to provide remission of eligible embedded duties, taxes and levies that are not otherwise refunded.
RoDTEP has operated on a series of short extensions rather than a settled multi-year term. Under the extension notified by the DGFT in March 2026, the scheme applies to eligible exports up to 30 September 2026, with the rates in Appendices 4R and 4RE continuing unchanged. The Rebate of State and Central Taxes and Levies (RoSCTL) scheme was extended on a comparable basis in April 2026, up to 30 September 2026 or until approval under the 16th Finance Commission cycle, whichever is earlier.
Exporters should therefore treat the operative end date as a matter to be verified at the time of shipment rather than assumed from a published article, including this one.
Eligibility, rates and value caps are determined by tariff line and the applicable DGFT schedules. The position must be verified for the specific product; industry-level assumptions are unreliable.
The distinction matters most in textiles. Apparel, garments and made-ups falling within Chapters 61, 62 and 63 of the ITC (HS) are supported principally through RoSCTL, while eligible textile products outside those chapters may fall under RoDTEP.
Input-side relief is also available in places. Basic Customs Duty and the Agriculture Infrastructure and Development Cess on cotton imports (HS 5201) have been waived from 1 June to 31 October 2026. Duty drawback rates on gold and silver jewellery exports were revised upward in July 2026. Both are time-limited measures, and both illustrate the wider point: incentive planning is product-level and date-sensitive.
The India–UAE CEPA and What It Actually Requires
The commercial case for examining the UAE has strengthened considerably since the India–UAE Comprehensive Economic Partnership Agreement (CEPA) entered into force.
Under CEPA, the UAE eliminates tariffs on approximately 97% of its tariff lines, corresponding to around 99% of its imports from India by value ‚Äî with roughly 90% of Indian exports becoming duty-free immediately on entry into force and the balance phasing in over the agreement’s schedule. The agreement is particularly relevant to labour-intensive and manufacturing sectors: textiles, gems and jewellery, leather, engineering products, pharmaceuticals, food products and automobiles.
Preference is not automatic. To claim CEPA treatment, goods must satisfy the agreement’s rules of origin: a qualifying value content of not less than 40% calculated on FOB value, **and** a change in tariff classification at the four- or six-digit level for all non-originating materials.
Gems and jewellery are treated differently, with value-addition thresholds in the range of 3–7% reflecting the economics of that sector. For exporters in that trade, this is one of the more commercially significant features of the agreement and is frequently overlooked.
The scale of the relationship supports the case independently of any tariff calculation. India‚ÄìUAE bilateral trade reached approximately US$101.25 billion in FY 2025‚Äì26, with Indian exports exceeding US$37.35 billion. The UAE is India’s third-largest trading partner and second-largest export destination. During the January 2026 state visit, the two governments agreed to a target of doubling bilateral trade to US$200 billion by 2032.
For Indian exporters, the UAE is considerably more than an intermediary market.
The UAE as a Regional Operating Platform
For some businesses, exporting directly from India will remain the most efficient model. Others will find commercial value in a UAE subsidiary, distribution centre, warehouse, regional headquarters or manufacturing operation.
The advantages can include:
* proximity to customers across the GCC and wider Middle East;
* major international ports, airports and logistics networks;
* regional warehousing and distribution infrastructure;
* the ability to hold inventory closer to customers;
* local processing, assembly or manufacturing where commercially justified; and
* an established environment for cross-border investment.The structure must follow the business model. A company requiring warehousing and regional distribution needs a materially different UAE structure from one undertaking manufacturing, processing or regional headquarters functions.
Free-zone incorporation does not mean that all income is exempt from corporate tax. Under the UAE Corporate Tax regime, the 0% rate available to a Qualifying Free Zone Person applies only to Qualifying Income and is subject to prescribed conditions. Income falling outside that definition is subject to the standard 9% rate. Large multinational groups within scope of the Domestic Minimum Top-up Tax face a 15% effective floor.
Two Different Origin Questions
Businesses considering the UAE as part of an international supply chain face two distinct origin analyses. They operate under different rules, and conflating them is a common and expensive error.
**First: preferential origin, for goods moving from India to the UAE.** This is governed by CEPA’s rules of origin ‚Äî the 40% qualifying value content and change-in-tariff-classification tests above, evidenced by a certificate of origin issued under the agreement. This determines whether the goods enter the UAE at preferential duty.
**Second: non-preferential origin, for goods subsequently leaving the UAE for a third country.** This is governed entirely by the rules of the destination country — not by CEPA, and not by the fact that a UAE entity owns or ships the goods. It determines the tariff the goods face on arrival in that market.
The second analysis is where planning most often goes wrong. Moving goods through the UAE, repackaging them, relabelling them or carrying out limited processing does not convert Indian-origin goods into UAE-origin goods for another country’s customs authority. Whether origin changes depends on whether the manufacturing or processing performed in the UAE is sufficient to constitute a substantial transformation under that destination country’s test.
Where the destination is the United States, this warrants particular care. Misdeclaration of origin on goods transiting a third country carries substantial additional exposure — including a penalty tariff over and above the applicable rate, alongside penalties under US customs law — and enforcement attention in this area has increased significantly through 2026.
The commercial question should therefore not be:
> “Can we route the product through the UAE?”
It should be:
> “What genuine manufacturing, processing or value addition takes place in the UAE, and how will the destination country’s origin and tariff rules treat the resulting product?”
A supply-chain decision built on an assumed tariff advantage, without first establishing origin, classification and customs treatment, creates compliance and commercial risk that typically exceeds the saving it was designed to capture.
What This Means for Different Exporters
**Textiles and apparel.** Indian export-support programmes can improve landed competitiveness, while the UAE offers regional warehousing, distribution and genuine value-added operations. RoDTEP, RoSCTL, customs classification and rules of origin must be examined product by product — the applicable scheme turns on the ITC (HS) chapter.
**Gems and jewellery.** India’s manufacturing capability combines well with the UAE’s established precious-metals and jewellery trading ecosystem, and CEPA’s reduced value-addition threshold for this sector makes preferential treatment materially easier to secure than in most other trades. Structure will depend on sourcing, manufacturing, inventory ownership, customs treatment and intended export markets.
**Food and agribusiness.** The UAE works well as a regional distribution platform, particularly for GCC markets. Food registration, labelling, product standards, certification and import requirements remain the determining factors in market entry.
**Engineering and industrial.** UAE-based inventory, assembly, servicing or manufacturing is justified where regional customers require shorter delivery times or local technical support.
In each case, the UAE belongs in the operating strategy — not merely on the list of jurisdictions in which to hold a licence.
Start with the Supply Chain, Not the Company Licence
Before establishing a UAE operation, map the commercial and regulatory position across the entire transaction:
1. Where will the product be manufactured?
2. What is its correct HS classification?
3. Which Indian export incentives or remission schemes apply, and until when?
4. Does the India–UAE CEPA provide preferential treatment, and are the rules-of-origin thresholds met?
5. What documentation and certificate of origin requirements apply?
6. What activity will actually take place in the UAE?
7. Will the UAE entity import, warehouse, distribute, process or manufacture?
8. What non-preferential rules of origin apply in the ultimate destination market?
9. What are the UAE customs, licensing and corporate tax consequences?
10. Does the structure make commercial sense after logistics, compliance and operating costs?Answering these before incorporation prevents a business from building a legal structure that does not match its actual trade flows.
From Exporting to a Regional Trade Strategy
India’s export-support framework and the India‚ÄìUAE economic relationship are creating substantial opportunities for businesses prepared to look beyond individual export transactions.
The opportunity is not to capture a tariff differential or secure an incentive. As the events of the past year demonstrated, both can move faster than a corporate structure can be built. The opportunity is a more resilient international supply chain — drawing on Indian manufacturing strength, government-backed export support, CEPA preferences and UAE logistics and regional-market infrastructure, where each genuinely fits the business.
For some exporters, that means continuing to manufacture in India and treating the UAE as a destination market. For others, it justifies warehousing, distribution, processing or manufacturing there.
The starting point is neither the incentive nor the jurisdiction. It is the commercial objective, and a structure designed around it.
Part of ATB Legal’s International Trade practice.