India has flagged a surge in imports of silver products from the United Arab Emirates (UAE). In a meeting of the joint committee under the India-United Arab Emirates Comprehensive Economic Partnership Agreement, the Indian delegation raised the issue of the recent spurt in imports of silver products and platinum alloy. It urged the UAE to verify compliance with the rules of origin norms and ensure they are not circumvented.
According to a release by the Commerce Ministry, “UAE agreed to examine concerns raised by the Indian counterparts”.
India signed a Comprehensive Economic Partnership Agreement (CEPA) with the UAE in 2022, under which duty on silver imports will be gradually reduced to nil over 10 years. Under the terms of the agreement, the customs on silver imports from the UAE will fall to 6 per cent on April 1, 2025, and further to 5 per cent the following year. In other words, the zero-tariff policy under the CEPA will likely shift all of India’s precious metals, gems and jewellery imports to the UAE.
Currently, the duty on silver imports from the UAE is 8 per cent under the CEPA. This pushed silver imports from the UAE to $1.7 billion in 2023-24, against $29 million in FY23 amid concerns of gaps in the implementation of rules of origin.
According to a report by the Global Trade Research Initiative, the CEPA with the UAE could lead to a significant revenue loss for India, estimated at Rs 63,000 crore, and disrupt domestic business. Calling for a review of the provision to prevent exploitation of tariff clauses, the top trade research body said it will lead to significant revenue losses, move import businesses from banks to a few private traders, and replace top suppliers with Dubai-based firms.
In FY24, India and the UAE had a total trade of $83.64 billion, which included $35.63 billion of exports and $48.02 billion of imports.