India and the United Arab Emirates (UAE) signed a broad trade and investment pact on Friday that will eventually cut all tariffs on each other's goods and aims to increase annual trade between the two nations to $100 billion within five years.

The virtual signing ceremony marks the first trade deal sealed by the Gulf state since it began pursuing such pacts last September in a bid to strengthen its status as a business hub.

India's Prime Minister Narendra Modi and UAE de facto ruler Sheikh Mohamed bin Zayed Al Nahyan witnessed the signing by senior officials from both nations, already major trade partners, during a virtual summit between the leaders.

The deal's signing “is a milestone event in our bilateral relations”, the official Emirati news agency WAM quoted Indian Foreign Minister S. Jaishankar as saying.

The Comprehensive Economic Partnership Agreement (CEPA), as it is known, is expected to boost annual bilateral non-oil trade from $60 billion to $100bn within the next three to five years, India's Prime Minister's office said.

“There will be a huge flow of trade and investments between both nations and it's going to open the door for more business opportunities,” Emirati Minister State for Foreign Trade Thani Al Zeyoudi told Reuters.

The agreement, which was not immediately made public, eliminates 80 per cent of tariffs on UAE and India goods, while all tariffs are to be removed within ten years, Al Zeyoudi said.

UAE commodities like aluminium, copper and petrochemicals would benefit from the removal of tariffs, he said.

The deal also covers services, investments, intellectual property, and a commitment by the UAE to grant 140,000 employment visas to highly skilled workers from India by 2030.

India is the second largest trading partner of the UAE, where each year billions of dollars in remittances are sent home by more than three million Indians working in the Gulf state.

The UAE economy ministry said by 2030 the CEPA would add $9bn, or 1.7 per cent, to UAE gross domestic product, exports would increase $7.6bn, or 1.5pc, and imports would rise $14.8bn, or 3.8pc.

The CEPA is expected to take 1.5-2 years to be implemented.

The UAE is pursuing similar trade and investment deals with nations including Turkey and South Korea, and expects to soon finalise bilateral negotiations with Israel and Indonesia.

It has also announced a raft of regulatory and social reforms in recent years to make business and life easier in the country where most of the 10 million population are foreigners.

“We're moving from a regional to a global hub,” Al Zeyoudi said, referring to the trade deals and policy announcements.