Despite the concessional duty offered under the comprehensive bilateral trade that took effect in May last year, Gold shipments from the UAE have already split from the previous year to a two-decade low in the year ended March 31, 2023.
As referred to in the Tariff Rate Quota (TRQ), the India- UAE- free – trade pact, confessional taxation is applicable on the first 120 tonnes of gold imports in the first year.
The data slowed; in FY23, India imported only around 52.81 tonnes of gold from Abu Dhabi, one of the seven emirates that constitute the UAE. This means 47 % lower than the 99.86 tonnes imported the previous year. It is also the most inferior annual gold import from the UAE after FY03 when it was 18 tonnes.
However, overall gold imports of India dropped by 23% in FY 23 to 677 tonnes from 878 tonnes in the previous year. In this period, Switzerland, India’s largest source of gold imports, saw its shipments fall by 39% to 220 tonnes from 360 tonnes in the previous fiscal.
Colin Shah, a former Gem and Jewellery Export Promotion Council chairman, noted that Gold Imports from the UAE had fallen last year as clarity around TRQ was expected.
Shah added, “he predicted higher growth in fold imports from the UAE during FY24. As of last year, the import modalities under TRQ needed to be more precise. There needed to be clarity, SOPs, or customs, and due to a lack of transparency for the nominated agencies, the benefits of the rebate were not seen. This financial year is inwards, and these challenges are clear.
Industry experts also attributed the fall to the increase in the import duty on June 30, 2022, which they said encouraged the smuggling of gold.
The Centre then increased gold import duty to 15% from 10.75 % to check the widening current account deficit owing to a downpour in imports of the yellow metal.
Finally, this was stopped in October with the increase on the duty of platinum by the government to 15.4%
Moreover, according to an industry representation reviewed by Mint, around 25 tonnes of such imports were recorded during September and October; however, the duty increase on platinum to deter imports, the value of such inbound shipments of the precious metal moderated to $1.13 million in November.
According to Arpita Mukherjee, professor at the Indian Council for Research on International Economic Relations, “One reason for the fall in gold imports may be due to the government’s focus on reducing imports. Secondly, many of our gold imports are exported, so gold imports will increase when exports increase and vice versa”.
Moreover, a 1% duty concession for gold imports from the UAE can be availed under India’s bilateral comprehensive trade pact with UAE.
However, spokespersons for India’s Ministry of Commerce and Industries and the UAE’s Ministry of Economy have yet to respond to queries.
The bilateral agreement between India and UAE also extended zero-duty access to 90% of Indian products and 65% of products from the UAE. From around 10 years, 97% of Indian products will get zero duty access to the UAE market, and 90% of UAE products will have duty-free access to the Indian market.
