India Seeks Review Of Trade Agreement With UAE Amid Bullion Import Surge
Date
8/17/2024 4:26:11 AM
(MENAFN- KNN India)
New Delhi, Aug 17 (KNN)
In a move to protect domestic industries and curb the influx of precious metals, India is pushing for a review of its Comprehensive Economic Partnership Agreement (CEPA) with the United Arab Emirates (UAE).
The Global Trade Research Initiative (GTRI), a prominent trade policy think-tank, has recommended significant changes to the agreement, which came into effect in May 2022.
The primary concern stems from a dramatic surge in bullion imports from the UAE following the implementation of CEPA.
Silver imports skyrocketed from USD 29.2 million in 2022-23 to a staggering USD 1.74 billion in 2023-24. Similarly, gold bar imports reached 119.35 tonnes, valued at USD 7.62 billion in 2023-24.
GTRI founder Ajay Srivastava emphasised the need for India to "take back tariff cuts on platinum, silver, diamonds, and gold jewellery."
He also suggested adjusting value addition rules and banning the conversion of expensive products like silver bars into cheaper forms such as silver granules to prevent exploitation of CEPA benefits.
Of particular concern is a provision that could allow unlimited gold imports from Dubai at zero duty by 2026, exploiting a loophole in the platinum classification. This could lead to substantial losses in customs revenue and strain India's foreign exchange reserves.
The agreement's impact on India's diamond industry is another focal point. The CEPA allows cut and polished diamonds to be imported duty-free with just 6 per cent value addition in Dubai, potentially undercutting India's USD 15.9 billion export industry in this sector.
Additionally, the review aims to address concerns about the import of sanctioned metals from Russia via Dubai and the alleged misuse of special privileges granted to the Gift City bullion exchange.
While the recent budget partially addressed these issues by reducing duties on gold and silver from 15 per cent to 6 per cent, experts view renegotiating CEPA as the only long-term solution to protect India's economic interests and domestic industries.
As trade relations evolve, this proposed review underscores the delicate balance between fostering international partnerships and safeguarding national economic priorities.
(KNN Bureau)
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