(MENAFN- KNN India)
New Delhi, Jun 17 (KNN) India's Gold and silver imports from the United Arab Emirates (UAE), a partner in the India-UAE Comprehensive Economic Partnership Agreement (CEPA), have surged by a staggering 210 per cent to reach USD 10.7 billion in the fiscal year 2023-24, according to a report by the Global Trade Research Initiative (GTRI).
This sharp rise is primarily attributed to the import duty concessions granted by India to the UAE under the CEPA.
The CEPA, signed in February 2022 and implemented in May 2022, allows India to import unlimited quantities of silver at a concessional 7 per cent tariff rate and 160 metric tonnes of gold at a 1 per cent concession.
Additionally, India has facilitated gold and silver imports from the UAE through the India International Bullion Exchange (IIBX) in GIFT City, Gujarat, by permitting private firms to import from the UAE, a privilege previously limited to authorised agencies.
While India's total imports from the UAE fell by 9.8 per cent from USD 53.2 billion in FY23 to USD 48 billion in FY24, imports of gold and silver skyrocketed by 210 per cent, rising from USD 3.5 billion to USD 10.7 billion.
Imports of all other products declined by 25 per cent, from USD 49.7 billion in FY23 to USD 37.3 billion in FY24.
Ajay Srivastava, Founder, GTRI, expressed concerns about the unsustainability of the current import levels, citing the UAE's lack of gold or silver mining operations and insufficient value addition to imported precious metals.
He suggested lowering India's high import duties on gold, silver, and jewellery from 15 per cent to 5 per cent to curb large-scale smuggling and misuse.
Furthermore, the report emphasised the need for rigorous verification of the claimed value addition by Dubai-based refiners in gold and silver imports to ensure compliance with the CEPA's rules of origin and tightening regulations around the IIBX to control the volume and nature of precious metal imports.
The surge in imports of gold and silver, which act more like financial instruments than regular trade items, contributes to a higher current account deficit for India.
The report advised against including these items in any free trade agreement (FTA) and called for a comprehensive review of tariff concessions granted for these items in various FTAs and under the Duty-Free Tariff Preference (DFTP) scheme.
(KNN Bureau)
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