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UAE gold trade gets big fillip as India opens special window to import 140t at lower duty

New Delhi announced recently that the gold tariff rate quota (TRQ) will be allocated to old and new applicants

The decision by the Government of India to open a fresh window for the import of 140 tonnes of gold from the UAE by manufacturers and traders of the yellow metal at a concessional rate under the India-UAE Comprehensive Economic Partnership Agreement (Cepa) during the financial year 2023-24 is expected to give a significant fillip to Dubai gold trade.

New Delhi announced recently that the gold tariff rate quota (TRQ) will be allocated to old and new applicants as per the revised simpler eligibility norms and lesser compliance burden for Indian importers.

As per the Cepa agreement, which has been in force since May 1, 2022, India can import 140 tonnes in 2023-24 at a one per cent duty concession on the applied Most Favoured Nation rate, which is 15 per cent.

As per the bilateral trade pact, there is no revenue loss on account of imports under the quota system after changes were made to the eligibility norms.

For the UAE bullion traders and the jewellery trade that depend on the import of gold ornaments from India, the government’s move to cut one per cent import duty is critical and will have a positive impact on boosting the sector, particularly when the yellow metal price rose to a record high on Thursday following another 25-basis-point rate hike by the US Federal Reserve.

On Thursday, the gold price displayed some correction after posting an all-time high of at $2,081.80 per troy ounce after Fed chair Jerome Powell announced that further monetary policy decisions would be highly dependent on incoming data.

Shamlal Ahamed, managing director, International Operations, Malabar Gold & Diamonds, said the benefits provided by Cepa further enhanced the already robust jewellery retail and wholesale business here, reinforcing UAE as the preferred jewellery destination offering the best quality, design options and prices to shoppers, including residents, transit passengers, and tourists.

“I’m certain that those benefits will increase manifold in the coming years as the officials are constantly taking feedback from the industry to support its adoption and utilization,” said Ahamed.

John Paul Alukkas, managing director international operations at Joyalukkas, said: “Primarily this import agreement shows the strength of the UAE- India trade relationship. Other than this, since this agreement is now open to all manufacturers & traders in the UAE it in effect becomes more inclusive and hence beneficial for the entire trade in the UAE. I feel this is the beginning of better things to come and am happy and looking forward to more such initiatives to grow the gold & jewllery trade between UAE & India.”

Under the Cepa, the UAE offered immediate zero-duty market access for the export of gold jewellery from India, in exchange for Tariff Rate Quota for gold. The TRQ increased from 110 tonnes in FY23, 140 tonnes in FY24 and gradually to a maximum of 200 tonnes over five years, with only a 1.0 per cent duty concession.

During the May-March 2022-23 period, out of 110 MTs TRQ of gold allocated, only 8.1 tonnes were imported. Following this, the UAE requested India to remove restrictive criteria such allocation of Gold to only jewellery manufacturers and to allow all importers to be eligible for availing gold TRQ. India’s total gold imports shrank 24 per cent on-year in FY23 to $35 billion.

As per the new decision, the gold TRQ would be allocated to all applicants both 78 old and new applicants as per the revised guidelines.