NEW DELHI: With the government seeking a review of certain clauses in the free trade agreement with the UAE, think tank GTRI on Friday called for the withdrawal of customs cuts on platinum, silver, diamond and gold jewellery and amendments to the pact’s rules of origin.
India and the United Arab Emirates (UAE) formally signed a free trade agreement (FTA), called the Comprehensive Economic Partnership Agreement (CEPA), on February 18, 2022, which came into effect on May 1, 2022.
The Global Trade Research Initiative (GTRI) has previously said the agreement contains provisions for unlimited duty-free imports of gold, silver, platinum and diamonds into India over the next few years, which will deal a blow to the domestic industry.
It has also been alleged that the rules of origin of the agreement are open to misuse, hence India needs to reassess CEPA. Meeting these rules is mandatory to avail customs duty relief under the agreement.
GTRI said in its review that India should focus on issues like “withdrawal of duty reductions on platinum, silver, diamond and gold jewellery, adjustment of value addition rules to exclude margin from value addition calculation in rules of origin, prohibition on conversion of a more expensive product (silver bars) into a cheaper product (silver grains) to avail CEPA benefits. “It also asked the government to stop import of sanctioned metals from Russia via Dubai and revoke privileges to the GIFT City precious metals exchange for misuse.
He added that the main goal of the review should be to reduce bulk bullion imports and tighten rules of origin to prevent misuse of bullion imports from Dubai.
“In FY24, 119.35 tonnes of gold bars worth USD 7.62 billion were imported. Silver imports from the UAE surged by 5,853 per cent from USD 29.2 million in FY23 to USD 1.74 billion in FY24,” it said, adding that gold jewellery imports from the UAE grew by 290 per cent from USD 347 million in FY22-23 to USD 1.35 billion in FY24.