The Global Trade Research Initiative (GTRI) has called for a review of the Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates (UAE), focusing on provisions related to precious metals and jewellery imports.
According to a report in Deccan Herald, the think tank warns that the current agreement could lead to unlimited duty-free imports of gold, silver, platinum, and diamonds into India, potentially harming the domestic industry.
The CEPA, implemented in May 2022, has significantly impacted trade flows. GTRI reports that gold bar imports from the UAE reached 119.35 tonnes, valued at $7.62 billion in fiscal year 2024.
Silver imports dramatically increased 5,853%, from $29.2 million in FY23 to $1.74 billion in FY24. Gold jewellery imports also surged by 290%, from $347 million to $1.35 billion in the same period.
Per the report, GTRI Founder Ajay Sahai highlighted concerns about potential misuse of the rules of origin in the agreement.
He pointed out a loophole in the classification of platinum, where metal containing just 2% platinum can be classified as such, potentially allowing unlimited gold imports from Dubai at zero duty.
The think tank recommends several measures in the CEPA review, including withdrawing tariff cuts on platinum, silver, diamonds, and gold jewellery.
It also suggests adjusting value addition rules to exclude profit margins from calculations in the rules of origin and banning the conversion of expensive products like silver bars to cheaper ones like silver granules to exploit CEPA benefits.
GTRI also raised concerns about the transparency of trades conducted at the Gift City bullion exchange, suggesting potential pre-arranged deals and invoice manipulation.
The report stated that while the Indian government reduced import duties on gold and silver from 15% to 6% in the 2024 Budget to control large imports under the CEPA, GTRI warns this may only offer partial relief.
With tariffs on gold and silver from Dubai set to drop to zero in coming years, imports are likely to rise again unless the agreement is renegotiated.
The GTRI’s recommendations aim to protect India’s domestic jewellery industry and prevent potential misuse of the trade agreement.
As the review of the CEPA progresses, these suggestions could play a crucial role in shaping future trade relations between India and the UAE.
