India-UAE Free Trade Agreement Boosts Gold Imports at Concessional Rates

The Indian government has announced the import of up to 160 tonnes of gold from the UAE at concessional rates for 2024-25 under the India-UAE free trade agreement. The Comprehensive Economic Partnership Agreement (CEPA) allows a one per cent tariff concession, and gold imports have surged significantly, impacting the current account deficit.

The Indian government has authorized the import of up to 160 tonnes of gold from the UAE at preferential rates for the financial year 2024-25 under the India-UAE free trade agreement, according to an official statement on Tuesday.

The agreement, known as the Comprehensive Economic Partnership Agreement (CEPA), has been effective since May 1, 2022. It permits India to import up to 200 metric tonnes of gold annually from the UAE with a one per cent tariff concession under the Tariff Rate Quota (TRQ).

Last fiscal year, the import quota was set at 140 tonnes, increasing to 160 tonnes for 2024-25, stated the official. In its June report, think tank GTRI noted a 147.6 per cent surge in India's gold imports from the UAE, from USD 3 billion in FY23 to USD 7.6 billion in FY24, prompting a call for a review of the agreement. India's gold imports, which impact the country's current account deficit, fell by 4.23 per cent to USD 12.64 billion during April-July 2024-25 amid global economic uncertainties, per government data. The government reduced customs duty on gold and silver to 6 per cent from 15 per cent in the budget. India's gold imports increased by 30 per cent to USD 45.54 billion in 2023-24. Switzerland is the largest source of gold imports, contributing to 40 per cent, followed by the UAE at over 16 per cent and South Africa at about 10 per cent. The precious metal constitutes over 5 per cent of the country's total imports.

(With inputs from agencies.)