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UAE gold imports fall despite deal

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New Delhi : Gold shipments from the United Arab Emirates (UAE) nearly halved in the year ending March 31, 2023 from the previous year to two lowest level in ten years.

New Delhi : Gold shipments from the United Arab Emirates (UAE) nearly halved in the year ending March 31, 2023 from the previous year to two lowest level in ten years.

According to the India-UAE Free Trade Agreement, the first 120 tons of products can enjoy preferential tariffs gold import In the first year, it is called a tariff rate quota (TRQ).

According to the India-UAE Free Trade Agreement, the first 120 tons of products can enjoy preferential tariffs gold import In the first year, it is called a tariff rate quota (TRQ).

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Data showed that in FY23, India only imported about 52.81 tonnes of gold from Abu Dhabi, one of the seven emirates of the UAE. This is 47% less than last year’s imports of 99.86 tonnes. It was also the lowest annual UAE gold import since fiscal 2003, when imports were 18 tonnes.

However, India’s total gold imports fell by 23% in FY23 to 677 tonnes from 878 tonnes in the previous year. Shipments from Switzerland, India’s largest source of gold imports, fell 39% to 220 tonnes during the period from 360 tonnes in the previous fiscal.

Colin Shah, former vice-chairman of the Gem and Jewelry Export Promotion Council (GJEPC), said gold imports from the UAE fell last year in anticipation of tariff quota clarity. “Until last year, the way of importing under TRQs was unclear. There was no clear regulation, no SOP (standard operating procedure) and customs, and due to the lack of clear regulation by designated agencies/importers, no benefits of duty rebates were seen. From this year ( These (challenges) were evident at the start of the fiscal) year,” Shah said, adding that he expected higher growth in gold imports from the UAE in FY24.

Industry experts also attributed the drop to an increase in import duties on June 30, 2022, which they said encouraged gold smuggling.

The center then raised import duties on gold to 15% from 10.75% in an effort to rein in a widening current account deficit caused by a surge in gold imports.

A loophole in the regulations allows many to import refined gold in the form of platinum alloys, which are subject to a 10.75% duty, while gold is subject to a 15% duty.

The move was finally halted in October when the government raised platinum alloy tariffs to 15.4%.

According to industry representatives reviewed by Mint, around 25 tonnes of such imports were made between September and October. However, the value of inbound shipments of the precious metal fell to just $1.13 million in November after platinum tariffs were raised to discourage imports.

“One reason (for the decline in gold imports in FY23) could be the government’s focus on reducing imports. Second, most of our gold imports are exported.” Arpita Mukherjee, a professor at the Indian Council of International Economic Relations (ICRIER), Arpita Mukherjee said. “So when exports increase, (gold) imports increase and vice versa.”

Under India’s bilateral comprehensive trade agreement with the UAE, imports of gold from the UAE are eligible for a 1% tariff concession. In the first year, the preferential gold quota is 120 tons. The agreement, which came into force in May 2022, is pro-rated at 110 tonnes. The second year is limited to 140 tons, the third year is limited to 160 tons, the fourth year is limited to 180 tons, and the fourth year is limited to 200 tons. fifth year.

Spokespersons for India’s Commerce and Industry Ministry and the UAE’s Economy Ministry did not respond to queries.

The bilateral agreement between India and the UAE also extends zero-duty access to 90 percent of Indian products and 65 percent of UAE products. Within 10 years, 97% of Indian products will enter the UAE market with zero tariffs, and 90% of UAE products will enter the Indian market duty-free according to the agreement.

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