GTRI raises red flag over gold imports from UAE
Seeks urgent review of CEPA that allows unlimited imports of gold, silver, platinum, and diamonds from UAE at zero tariffs
image for illustrative purpose
It will also disrupt the domestic diamond and jewellery industry, with major imports coming from Gift City, which has transparency issues - Ajay Srivastava, founder, GTRI
Tax Anomaly:
- Currently, import duty on gold from Dubai at 5%
- It’ll be zero in next 3 years under CEPA
- Silver imports rising as duty fell to 8% from 15%
New Delhi: Think tank GTRI on Tuesday expressed serious concerns over spurt in import of precious metals from the UAE under a free trade agreement (FTA) and demanded an investigation as it is impacting domestic jewellery industry and leading to potential annual revenue loss.
The Global Trade Research Initiative (GTRI) said that by addressing these issues, authorities can ensure the integrity of import practices, safeguard domestic industries, and prevent significant revenue losses.
Seeking an urgent review of the agreement, it said the India-UAE comprehensive economic partnership agreement (CEPA) allows unlimited imports of gold, silver, platinum, and diamonds from the UAE into India with zero tariffs in the coming years. This will lead to significant annual revenue losses, move import business from banks to a few private traders, and replace top suppliers with Dubai-based firms,” it said in its report.
“The zero-tariff policy under CEPA is projected to cause an annual revenue loss of Rs63,375 crore due to duty-free imports of gold and silver, based on FY2024 import levels,” it said.
It will also disrupt the domestic diamond and jewellery industry, with major imports coming from Gift City, which has transparency issues.
An urgent review is needed, the report added. It noted that currently, gold can be imported from Dubai at 5 per cent duty, but this will drop to zero in three years if the alloy contains two per cent platinum. Similarly, it said, silver imports from the UAE have surged due to an 8 per cent duty under CEPA, compared to a 15 per cent duty in general, resulting in a significant tariff arbitrage. “CEPA tariff concessions are hurting India’s jewellery industry, with gold jewellery imports from the UAE increasing due to lower tariffs,” it said adding zero tariffs on cut and polished diamonds under CEPA threaten India’s domestic diamond industry, which currently benefits from zero duty on rough diamonds and a 5 per cent duty on cut and polished diamonds.
An e-mail query sent to the Commerce Ministry on the report did not elicit any response. GTRI also claimed that many imports do not meet Rules of Origin conditions. Hence, do not qualify for concessions, and raising the strong possibility of money laundering.
“The value addition process for silver imports is questionable, with concerns about money laundering. This is the reason for the shift of silver imports from Indian ports to GIFT City exchange to benefit from concessional tariffs,” it said. With regard to imports being routed through GIFT city, GTRI Founder Ajay Srivastava suggested that there should a CAG audit to investigate pre-arranged deals and invoice manipulation.
