[ad_1]
New Delhi : India’s move to support gold imports from the UAE by charging import duties one percentage point lower than imports from other countries has not borne fruit: only about two tonnes of gold were imported under the free trade agreement in the seven months to December.
New Delhi : India’s move to support gold imports from the UAE by charging import duties one percentage point lower than imports from other countries has not borne fruit: only about two tonnes of gold were imported under the free trade agreement in the seven months to December.
In fact, instead of growing, gold imports fell by double digits in value between April and November following the signing of the India-UAE Comprehensive Economic Partnership Agreement (CEPA).
In fact, instead of growing, gold imports fell by double digits in value between April and November following the signing of the India-UAE Comprehensive Economic Partnership Agreement (CEPA).
Subscribe to continue reading
Some of this was provided by government officials to importers who took advantage of the system and imported gold disguised as platinum alloy. The India-UAE free trade agreement, which came into force on May 1, allows for preferential tariffs on gold of up to 120 tonnes in the first year (80 tonnes by December). Officials attributed the tepid response under CEPA to a June 30, 2022 spike in gold import duties, which they said could lead to inflows of gold from informal channels.
The center raised the base tariff on gold to 12.5% in July. Adding in the 2.5% agricultural infrastructure development tax, the effective gold tariff is 15%. The basic duty on gold imported from the UAE is 11.5%. “We are looking into the matter and industry sources have told us that a lot of the gold is not imported from the UAE due to lower prices on the gray market,” a government official said.
Import data from the United Arab Emirates showed a surge in platinum shipments between April and November. Government officials told Mint this was due to the exploitation of a loophole in which a platinum alloy containing 96% gold was imported into India to take advantage of the tariff differential with gold. As a result, some bullion importers reportedly imported refined gold masquerading as platinum alloy, when the import duty was 10.4% compared to 15% for gold. To be sure, import duties on platinum alloys were raised to 15.4% in October to close the loophole. “We’ve been told that gold purchases are likely to increase starting next month. This is partly because the problem of platinum alloys being disguised as gold is largely being addressed by plugging loopholes,” the official said .
Around 25 tonnes of such imports were recorded between September and October 2022, according to industry representatives reviewed by Mint.
Nearly US$1 billion worth of platinum was imported from the UAE in September, up more than 34,000 times year-on-year, data from the Ministry of Commerce showed. Over the same period, the Gulf state’s gold imports fell 82% to $135 million.
In October, platinum imports from the UAE amounted to US$139 million, an increase of more than 450 times over the same period last year. Gold imports fell 76% to $160 million. However, inbound shipments of the precious metal slowed to just $1.13 million in November after tariffs on platinum alloys were imposed to discourage imports. “We expect gold imports from the UAE to increase in the coming months as the loophole in platinum alloys has largely been resolved,” the official said.
A query emailed to the Commerce Department on Tuesday morning remained unanswered by press time.
dilasha.seth@livemint.com
[ad_2]
Source link