India Tightens Import Rules for Gold and Silver from UAE
New regulations aim to enhance compliance and transparency in the bilateral gold trade.
India has implemented new restrictions on the importation of gold and silver from the United Arab Emirates (UAE), targeting these precious metals in unwrought, semi-manufactured, and powdered forms.
This regulatory change, part of India’s Budget 2025, introduces distinct Harmonised System (HS) codes for gold dore, silver dore, and high-purity platinum, aimed at improving transparency and compliance in the ongoing trade relationship between the two nations.
The restrictions were designed to close a loophole that had allowed importers to mislabel nearly pure gold—containing 99 percent gold—under the guise of platinum alloys to benefit from lower import duties stipulated in the India-UAE Comprehensive Economic Partnership Agreement (CEPA).
With the introduction of specific HS codes for platinum with 99 percent purity or higher, India ensures that only true platinum qualifies for duty concessions, while other compositions now face limitations, effectively curtailing disguised gold imports.
Furthermore, the importation of precious metals is restricted to nominated agencies, certified jewellers, and those holding valid tariff rate quotas (TRQ) under CEPA, aiming to enhance oversight and streamline the import process.
India's imports of gold from the UAE have increased significantly, soaring from $3.5 billion in the fiscal year 2023 to $10.7 billion in the fiscal year 2024, according to data from the Ministry of Commerce and Industry.
This stark increase occurred in the context of a 9.8 percent reduction in overall imports from the UAE, underscoring the growing importance of precious metals in the bilateral trade framework.
Under the CEPA terms, India grants a 1.0 percent tariff concession on 200 metric tonnes of gold yearly, which lowers the duty from 15 percent, as stipulated for Most Favoured Nation (MFN), to 14 percent.
For silver, a 7.0 percent concession is allowed on unlimited quantities, bolstering the UAE’s status as a preferred corridor for gold imports, even though the country does not engage in substantial gold mining or processing.
Concerns have been raised regarding the sustainability of this trade.
The Global Trade Research Initiative (GTRI) indicated in 2024 that the CEPA's tariff concessions were vulnerable to misuse, primarily benefiting a limited number of importers who engaged in tariff arbitrage without transferring savings to consumers.
Critics point out that the UAE’s role as a re-exporter—importing high-purity gold bars, converting them into unwrought forms, and exporting to India—often does not satisfy the CEPA requirement for 3.0 percent value addition, contributing to India's decision to tighten its regulatory framework.
Industry experts, including Sajith Kumar PK, CEO of IBMC Financial Professionals Group, see the regulations as a move toward greater transparency in the gold trade between India and the UAE.
Kumar stated that the adjustments would help align the bilateral trade with the Dubai Good Delivery Standard and CEPA guidelines.
The India International Bullion Exchange (IIBX) based in Gift City, Ahmedabad, is set to facilitate smoother gold imports under the new TRQ system, reinforcing compliance measures.
Dubai, which plays a pivotal role in the global gold market by handling approximately 25 percent of the world's physical gold trade, faces potential challenges from these new restrictions.
The emirate's gold economy, valued at around $75 billion annually, depends significantly on exports to India.
A decline in India's gold imports as a result of stricter regulations may compel Dubai traders to either seek alternative markets or adjust their operations to comply with India's new mandates, which could lead to increased operational costs.
In addition to the immediate impact of regulatory changes, India's long-term CEPA commitments—including the phased elimination of duties on platinum within five years and on cut and polished diamonds within ten—may continue to facilitate significant import flows through the UAE.
However, analysts expect these recent measures will initially slow down the import of gold and silver as importers adapt to the new regulatory landscape.
This regulatory change, part of India’s Budget 2025, introduces distinct Harmonised System (HS) codes for gold dore, silver dore, and high-purity platinum, aimed at improving transparency and compliance in the ongoing trade relationship between the two nations.
The restrictions were designed to close a loophole that had allowed importers to mislabel nearly pure gold—containing 99 percent gold—under the guise of platinum alloys to benefit from lower import duties stipulated in the India-UAE Comprehensive Economic Partnership Agreement (CEPA).
With the introduction of specific HS codes for platinum with 99 percent purity or higher, India ensures that only true platinum qualifies for duty concessions, while other compositions now face limitations, effectively curtailing disguised gold imports.
Furthermore, the importation of precious metals is restricted to nominated agencies, certified jewellers, and those holding valid tariff rate quotas (TRQ) under CEPA, aiming to enhance oversight and streamline the import process.
India's imports of gold from the UAE have increased significantly, soaring from $3.5 billion in the fiscal year 2023 to $10.7 billion in the fiscal year 2024, according to data from the Ministry of Commerce and Industry.
This stark increase occurred in the context of a 9.8 percent reduction in overall imports from the UAE, underscoring the growing importance of precious metals in the bilateral trade framework.
Under the CEPA terms, India grants a 1.0 percent tariff concession on 200 metric tonnes of gold yearly, which lowers the duty from 15 percent, as stipulated for Most Favoured Nation (MFN), to 14 percent.
For silver, a 7.0 percent concession is allowed on unlimited quantities, bolstering the UAE’s status as a preferred corridor for gold imports, even though the country does not engage in substantial gold mining or processing.
Concerns have been raised regarding the sustainability of this trade.
The Global Trade Research Initiative (GTRI) indicated in 2024 that the CEPA's tariff concessions were vulnerable to misuse, primarily benefiting a limited number of importers who engaged in tariff arbitrage without transferring savings to consumers.
Critics point out that the UAE’s role as a re-exporter—importing high-purity gold bars, converting them into unwrought forms, and exporting to India—often does not satisfy the CEPA requirement for 3.0 percent value addition, contributing to India's decision to tighten its regulatory framework.
Industry experts, including Sajith Kumar PK, CEO of IBMC Financial Professionals Group, see the regulations as a move toward greater transparency in the gold trade between India and the UAE.
Kumar stated that the adjustments would help align the bilateral trade with the Dubai Good Delivery Standard and CEPA guidelines.
The India International Bullion Exchange (IIBX) based in Gift City, Ahmedabad, is set to facilitate smoother gold imports under the new TRQ system, reinforcing compliance measures.
Dubai, which plays a pivotal role in the global gold market by handling approximately 25 percent of the world's physical gold trade, faces potential challenges from these new restrictions.
The emirate's gold economy, valued at around $75 billion annually, depends significantly on exports to India.
A decline in India's gold imports as a result of stricter regulations may compel Dubai traders to either seek alternative markets or adjust their operations to comply with India's new mandates, which could lead to increased operational costs.
In addition to the immediate impact of regulatory changes, India's long-term CEPA commitments—including the phased elimination of duties on platinum within five years and on cut and polished diamonds within ten—may continue to facilitate significant import flows through the UAE.
However, analysts expect these recent measures will initially slow down the import of gold and silver as importers adapt to the new regulatory landscape.
Translation:
Translated by AI
