Tariff concessions on gold has become a sticking point in India’s free trade agreement negotiations with Peru.
Such concessions, which accounted for $1.8 million or 80% of India’s imports from Peru in FY23, also attract a 10% basic customs duty in India.
Hence, even minor tariff concessions could result in an increase in imports.
For instance, due to tariff concessions under India-UAE FTA, gold imports from the UAE doubled in 2023, compared to 2022. Peru too, could see a similar surge in gold imports, if such concessions are made.
India’s bound duty on gold stands at 40%, but the current applied tariff stands at 10%. Free trade agreements often offer concession on effective duties rather than on bound duty.
The FTA negotiations with Peru also represent a significant step towards deepening economic ties between both countries. The idea is also to boost bilateral trade and investment.
Since 2017, both countries have been actively engaged in discussions to finalise an FTA and the next round is scheduled for Feb. 12.