## India Needs to Verify Value Addition on Gold and Silver Imports
India needs to thoroughly verify the claimed value addition on gold and silver imports from the UAE, as per a report by the Global Trade Research Initiative (GTRI). With a surge in imports of these metals last financial year, it is crucial to investigate the linkages between exporting and importing firms.
### Duty Concession under India-UAE CEPA
Under the India-UAE Comprehensive Economic Partnership Agreement (CEPA), gold and silver shipments from the UAE enjoy duty concessions of 1% and 7%, respectively. However, a 3% local value addition is required to avail of this concession.
### Impact of Lower Duties on Imports
The UAE, not being a producer of gold and silver, imports high-purity gold bars and silver bars for conversion into unwrought gold and silver grains for export to India. This process involves a value addition of around 1%, falling short of the 3% required under the CEPA.
### Surge in Imports and Revenue Loss
The lower duties have resulted in a significant growth in imports of gold and silver from the UAE, increasing by 210% to $10.7 billion in FY24. The surge in gold imports led to a revenue loss of Rs 635 crore, while silver imports saw a revenue loss of Rs 1,010 crore in the same period.
### Policy Influence and Current Account Concerns
Government policies have also contributed to the increase in imports of gold and silver from the UAE, impacting India’s current account. The Directorate General of Foreign Trade (DGFT) has supported gold jewellery imports from the UAE by imposing restrictions on imports from other countries.
### Recommendations for Balanced Import Policies
To address these concerns, tighter monitoring of value addition norms and a revisit of DGFT’s orders are essential. Regulations around the India International Bullion Exchange should be strengthened to control the volume and nature of precious metal imports, ensuring a balanced import policy that does not excessively favor the UAE.
#### Additional Insight:
The surge in imports of gold and silver from the UAE not only raises revenue loss concerns for India but also highlights the need for stricter oversight and policy adjustments to maintain a fair trade environment. By scrutinizing value addition claims and revisiting import regulations, India can mitigate the impact on its current account while promoting a balanced trading relationship with the UAE.
