Whalesbook
Gold imports from the UAE have surged dramatically, now making up 28% of India's total. This significant increase has led the Global Trade Research Institute (GTRI) to call for a review of trade concessions under the India-UAE Free Trade Agreement. GTRI Founder Ajay Srivastava noted that the UAE's share of India's gold imports jumped from 7.9% before the FTA to 28% by 2025, with import values soaring from $2.9 billion to $16.5 billion. The urgency for this review is heightened by Prime Minister Narendra Modi's recent call for national austerity.
Preferential Tariffs Fueling the Surge
Under the FTA, India offers preferential access to UAE gold through a Tariff Rate Quota (TRQ). Initially 120 tonnes annually, it's set to rise to 200 tonnes by 2027. This TRQ allows gold imports at a 1% lower tariff than standard rates. Combined with India's reduction of the general gold import duty from 15% to 6% in the 2024 Budget, gold entering via the UAE TRQ now faces an effective duty as low as 5%.
Rerouting Concerns and Proposed Solutions
A key concern for the GTRI is that the UAE does not mine or process gold. This points to a possibility that gold from third countries is being routed through the UAE to exploit the preferential tariffs in India. Such rerouting could undermine the FTA's purpose and harm India's trade balance. The GTRI has recommended stricter "rules of origin" and a reassessment of the precious metal concessions in the agreement. Additionally, the institute mentioned that private firms and jewelers can now import bullion directly through GIFT City, adding another complexity to these trade flows.