India Relaxes Gold Import Rules, Boosts UAE Trade under Cepa Agreement

Strategic Insights -

India, the world's fifth-largest gold importing country, has introduced a significant policy change, allowing banks and qualified jewellers to import gold from the UAE at a concessional duty rate of 1.0 per cent. This move, facilitated by the UAE-India Comprehensive Economic Partnership Agreement (Cepa), is expected to give a major fillip to the local gold exporters. The relaxed norms have come into effect, enabling Indian importers to import up to 140 tonnes of gold from the UAE in 2023-24.

Key Takeaways:

  • The new policy allows Indian banks and qualified jewellers to import gold from the UAE at a concessional duty rate of 1.0 per cent.
  • The initiative aims to facilitate gold trade between India and the UAE, benefiting the Indian jewellery industry and reducing transaction costs.
  • The UAE has offered India zero-duty market access for export of gold jewellery in exchange for a tariff rate quota for gold.
  • The Cepa agreement will increase duty-free access for Indian products to the UAE market and Indian consumers will benefit from reduced gold prices due to duty savings.
  • Gold imports to the UAE were valued at approximately $15.5 billion in 2022, with India importing $37 billion worth of gold in 2022, accounting for 8.0 per cent of global gold imports.
  • In FY23, India's total gold imports dropped by 23 per cent to 677 tonnes, with Switzerland being India's largest source of gold imports.

Statistics:

  • India allows import of up to 140 tonnes of gold from the UAE in 2023-24 at a concessional duty rate of 1.0 per cent.
  • Gold imports to the UAE were valued at approximately $15.5 billion in 2022.
  • India imported $37 billion worth of gold in 2022, accounting for 8.0 per cent of global gold imports.
  • In FY23, India's total gold imports dropped by 23 per cent to 677 tonnes.
  • India's largest source of gold imports is Switzerland, with imports falling by 39 per cent to 220 tonnes in FY23.

Sources:

  • India government official
  • Vipul Shah, chairman of the Gem and Jewellery Export Promotion Council of India
  • KP Abdul Salam, vice-chairman of Malabar Gold and Diamonds
  • Sajith Kumar PK, group CEO and managing director of IBMC International Group
  • Colin Shah, former vice-chairman of the Gem and Jewellery Export Promotion Council
  • "UAE-India Comprehensive Economic Partnership Agreement"
  • "Gold imports drop by 47 per cent from UAE, lowest in two decades"
  • "India's exports to UAE surge 13 per cent, imports rise 19 per cent"