NEW DELHI: India needs to reassess tariff concession on gold and silver imports from the United Arab Emirates (UAE) under its India-UAE Comprehensive Economic Partnership Agreement (CEPA), as the massive surge in imports is adversely impacting current account deficit of the country, according to a recent report by Delhi-based think tank GTRI.
The report highlighted concerns about revenue loss and trade imbalances resulting from the current tariff differentials. India’s total imports from the UAE fell by 9.8% from $53.2 billion in FY23 to $48.0 billion in FY24.
However, imports of gold and silver saw a significant increase of 210%, rising from $3.5 billion to $10.7 billion during the same period.
On the other hand, imports of all other products declined by 25%, dropping from $49.7 billion in FY2023 to $37.3 billion in FY2024.
India allows 7% tariffs concessions on import of unlimited quantities of silver and a 1% tariff concession on 160 metric tons of gold. CEPA was signed in February 2022 and implemented in May 2022.
“Increased imports contribute to a higher current account deficit. Since gold and silver act more like financial instruments than regular trade items, India should avoid including them in any Free Trade Agreement (FTA). If necessary, the decision should be made by the RBI, not by the Department of Commerce,” the report said.
GTRI’s other recommendations include potentially revising duty rates under the India-UAE Comprehensive Economic Partnership Agreement (CEPA) and implementing yearly import quotas for silver.