Gold and silver imports from UAE increased by 210 percent, GTRI said - there is a need for duty revision in FTA

The United Arab Emirates (UAE), India's free trade agreement (FTA) partner, increased its gold and silver imports. In the fiscal year 2023-24, it climbed by 210 percent to $10.7 billion.

To limit this growth, the concessional customs duty rates must be revised. The Economic Research Institute Global Trade Research Initiative (GTRI) presented a report on this.

According to the GTRI report, this sharp increase in gold and silver imports is mainly driven by the import duty concessions given by India to the United Arab Emirates under the India-UAE Comprehensive Economic Partnership Agreement (CEPA).

According to the GTRI report, India pays a duty of 7 percent on silver imports and a concession of 1 percent on 160 metric tonnes. The CEPA was signed in February 2022 and came into force in May 2022.

Apart from this, India has facilitated the import of gold and silver by allowing private companies to import from the UAE through the India International Bullion Exchange (IIBX) in GIFT City. Earlier, only a few authorized agencies get the benefit of this.

According to the report, India's total imports from the UAE fell by 9.8 percent from US $ 53.2 billion in FY 2023 to US $ 48 billion in FY 24. At the same time, gold and silver imports grew by 210 percent from US $ 3.5 billion to US $ 10.7 billion.

Imports of all other products fell by 25 percent, from US$49.7 billion in FY20 to US$37.3 billion in FY24.

"The high import duty of 15 percent on gold, silver, and jewelry in India is the root of the problem. Consider reducing the tariff to 5 percent. This will reduce large-scale smuggling and other abuses," said Ajay Srivastava, founder of GTRI.

Srivastava suggested that the government implement some measures to help India balance its trade policies, protect domestic revenues, and ensure fair competition in the import of precious metals and jewelry.