In a significant development, the Indian government has authorized banks to import gold from the United Arab Emirates (UAE) at a concessional duty rate within a specified annual quantity, leveraging the free trade agreement between the two nations. This move, aimed at boosting domestic jewellery manufacturing, is in line with the Comprehensive Economic Partnership Agreement.
Under the trade pact, Indian importers can enjoy a 1% duty advantage, allowing them to import up to 140 tonnes of gold from the UAE in the fiscal year 2023-24. This concession, outlined in a recent notification by the revenue department, follows eligibility criteria specified for tariff rate quota utilization. Notably, qualified jewellers and banks authorized by the Reserve Bank of India are now included in the liberalized norms for gold imports.
The UAE, in exchange for immediate zero-duty market access for export of gold jewellery, has fixed a tariff rate quota for gold imports. This quota, set at 110 tonnes in 2022-23 and increased to 140 tonnes in 2023-24, is projected to reach 200 tonnes over the next five years. Effectively, Indian importers can now bring in UAE gold by paying a 14% duty, a slight reduction from the prevalent rate of 15%.
Ajay Sahai, Director General of the Federation of Indian Export Organisations, emphasized the positive impact of this concessional duty on gold, making the precious metal more accessible for value addition. The move aligns with the government’s focus on strengthening the domestic jewellery manufacturing sector.
Ashok Seth, Regional Chairman of the northern region at the Gem Jewellery Export Promotion Council, hailed this as a major benefit of the free trade agreement, enhancing India’s competitiveness in the sector. The India-UAE agreement, signed on February 18, 2022, and effective from May 1, 2022, has already contributed to significant growth in bilateral goods trade, reaching $84.84 billion in 2022-23.
This latest development underscores the continued strengthening of economic ties between India and the UAE, with positive implications for the precious metal trade.
