India’s gold import bill for April-June 2026 climbed 47% to $11.01 billion, driven by a 125% surge in arrivals from the UAE. Analysts are now calling for a review of trade pact concessions, citing concerns over potential trade diversion. This development faces government scrutiny as officials attempt to manage a widening current account deficit.
India’s gold import bill has risen significantly in the first quarter of fiscal year 2026-27. Data shows that gold imports reached $11.01 billion between April and June 2026, marking a 47.1% increase compared to the same period in the previous year. A major driver of this spike has been the surge in gold shipments from the United Arab Emirates, which jumped 124.8% during the same timeframe.
The sharp rise in imports from the UAE has drawn attention to the India-UAE Comprehensive Economic Partnership Agreement, or CEPA. This trade pact currently provides a one-percentage-point tariff advantage on gold, allowing imports at a 14% duty rate compared to the standard 15% duty applied elsewhere. While this difference appears small, analysts at the Global Trade Research Initiative suggest that it creates a strong incentive for importers to route bullion through the UAE to save on costs.
Regulatory experts are questioning whether this trend aligns with the original intent of the agreement. Because the UAE is not a gold-producing nation, critics have raised concerns about the 'rules of origin'—a standard practice used to verify where a product is actually manufactured or sourced. There is now mounting pressure for the government to investigate whether third-country gold is being funneled through the UAE to take advantage of the lower tariff rate.
This trend coincides with broader macroeconomic pressure on the Indian economy. The country's current account deficit, which is the difference between the money flowing in and out of the country, widened to $4.2 billion in the April-June 2026 quarter. As gold is a significant import for India, large fluctuations in purchase volumes can put immediate strain on foreign exchange reserves and the rupee. In response, government officials have recently encouraged citizens to limit unnecessary gold purchases.
For investors and companies in the jewellery and bullion trade, this development introduces new regulatory risk. If the government decides to tighten the enforcement of origin rules or revises the tariff concessions, the cost of importing gold could rise for traders who have relied on the UAE route. Furthermore, high import duties and the potential for stricter policy enforcement could influence the margins of organised jewellery retailers. Investors may monitor future government announcements regarding the trade agreement, as any policy shift to plug the current account deficit or close trade loopholes could impact supply chains and raw material costs for the sector.