India Moves to Reassess Trade Deal with UAE Amid Precious Metals Import Surge

India is moving to reassess its trade agreement with the United Arab Emirates following a sharp rise in precious metals imports from the Gulf state, which has raised concerns that some traders may be exploiting existing tax loopholes, Bloomberg reported.

According to informed sources, Indian trade officials will meet their UAE counterparts next month to review the Comprehensive Economic Partnership Agreement (CEPA) between the two nations.

The discussions, the sources added, will focus on the effectiveness of rules governing the geographic origin of gold, silver, and platinum imports, and their alignment with India’s taxation objectives.

Tariff Cuts and Controversial Spike

Under the current agreement, New Delhi has gradually reduced tariffs on gold imports, while duties on silver and platinum have been set lower than those on gold.

Although India’s overall imports from the UAE fell during the 2023–2024 fiscal year, silver imports soared by an unprecedented 42,389% in the first half of 2024, surpassing 2,200 tonnes compared to the same period last year. Platinum imports also jumped 995%, reaching 1.7 tonnes.

This surge from a country without precious metal mines has raised questions over whether such shipments truly deserve preferential treatment. According to some sources, traders may be reclassifying gold as platinum to avoid higher tariffs.

Metal Classification Loopholes

Under World Customs Organization classifications, any alloy containing more than 2% of a cheaper metal can be deemed “platinum.” This has opened the door for reclassification of shipments to benefit from lower tariffs.

However, India’s new tax regime, announced in July, narrowed this loophole by cutting duties on gold and silver imports from 15% to 6% in a bid to support the domestic jewelry industry. Still, the existing CEPA agreement with the UAE stipulates a complete removal of tariffs on silver and platinum in the future, which could reignite such practices.

Research Warnings

Concerns about this trade first surfaced in a report released in June by the Global Trade Research Initiative (GTRI) in New Delhi. The report noted that current policies facilitate import flows from the UAE and exacerbate India’s trade deficit.