Indian Government Announces Import of Gold from UAE at Concessional Rate
The Indian government has recently revealed plans to import up to 160 tonnes of gold from the UAE at a concessional rate for the fiscal year 2024-25. This decision is part of the Comprehensive Economic Partnership Agreement (CEPA) that came into effect on May 1, 2022.
Import Commitment and Tariff Concession
Under the terms of the CEPA, India has committed to importing up to 200 metric tonnes of gold annually from the UAE. This import will benefit from a one percent tariff concession under the Tariff Rate Quota (TRQ), providing a favorable trade environment for both countries.
Last fiscal year, India notified the import of 140 tonnes of gold from the UAE, and this has now been increased to 160 tonnes for the upcoming fiscal year. This increase signifies the growing partnership between India and the UAE in the gold trade sector.
Insight into Gold Imports and Current Account Deficit
A think tank, GTRI, highlighted a significant rise in India’s gold imports from the UAE, reaching USD 7.6 billion in FY24 from USD 3 billion in FY23. While this has raised concerns, it also reflects the strengthening economic ties between the two countries.
Despite the rise in gold imports, India’s overall gold imports witnessed a slight dip during April-July 2024-25 due to global economic uncertainties. The country’s gold imports play a critical role in determining the current account deficit (CAD) and impact the overall economic landscape.
Government Initiatives and Trade Dynamics
Recognizing the importance of gold imports, the Indian government took steps to reduce customs duty on gold and silver from 15 percent to 6 percent in the budget. This move is aimed at promoting trade and making gold more accessible to consumers in the country.
In the previous fiscal year, India’s gold imports saw a substantial increase of 30 percent, reaching USD 45.54 billion. Switzerland remains the largest source of gold imports for India, with about 40 percent share, followed by the UAE (over 16 percent) and South Africa (approximately 10 percent).
Overall, the import of gold from the UAE under concessional rates showcases the strategic trade partnerships that India is fostering with key global players, contributing to economic growth and trade stability.
