Gold’s defiant summer
Gold is finishing one of its most-defiant summers in memory.
India is seeking to renegotiate its trade deal with the United Arab Emirates after a surge in precious metals imports from the Middle Eastern nation that has sparked concerns some traders have been exploiting tax loopholes.
Trade officials will likely meet their counterparts from the UAE next month to review the two countries’ Comprehensive Economic Partnership Agreement (CEPA), people with knowledge of the matter said, asking not to be identified as the discussions are private. Among other issues, they will examine the effectiveness of rules guaranteeing the geographical origin of platinum, silver and gold imports for tax purposes, the people added.
India’s trade ministry did not respond to a request for comment. A UAE spokesperson did not immediately reply to an email seeking comment.
Under the existing deal, India has already reduced standard import taxes on gold, while silver and platinum duties, both lower than bullion, are being phased down.
While imports from the UAE fell in the financial year 2023-24 compared with the earlier year, import of silver and platinum boomed. Inbound shipments of silver in the first half of 2024 soared 42,389% to over 2,200 tons compared to the same period in 2023, according to official data. Platinum imports jumped 995% to 1.7 tons.
The surge, coming from a nation without precious metals mines, has led to suspicions the imports do not in fact qualify for preferential treatment. Some traders may also be dodging the higher tariffs on gold by registering the imports as platinum, some of the people said.
Under World Customs Organization classifications, any metal alloy containing 2% or more of the cheaper metal is defined as platinum.
India’s new import duties regime announced in July has eliminated the loophole’s financial benefits — at the time, India slashed import taxes on gold and silver to 6% from 15%, in a move to support domestic jewelry manufacturers. But the existing deal with Dubai will eventually remove all taxes on both silver and platinum imports — opening up new incentives to relabel shipments.
Concerns over India’s precious metals trade with Dubai were first raised in June in a report by the New Delhi-based think tank Global Trade Research Initiative. The group pointed out that the current policy framework is enabling the flows and “exacerbating India’s trade deficit.”
(By Shruti Srivastava and Sybilla Gross)
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