India Duty Hike May Increase Gold and Silver Shipments From Dubai Under CEPA Pact
India’s recent decision to sharply raise import duties on gold and silver is expected to trigger a rise in precious metal inflows from Dubai, as traders seek to benefit from lower tariff routes available under the India UAE trade agreement.
Trade experts and market analysts say the move could significantly strengthen Dubai’s position as a key global hub for bullion trade with India. The development follows New Delhi’s announcement increasing customs duties on gold and silver imports from 6 per cent to 15 per cent in an effort to curb imports, protect foreign exchange reserves, and stabilize the rupee during a period of global economic uncertainty.
However, despite the broader duty hike, imports routed through the UAE continue to enjoy concessional treatment under the India UAE Comprehensive Economic Partnership Agreement (CEPA). Under the agreement, gold imported from Dubai attracts slightly lower tariffs through a tariff rate quota system, creating a cost advantage for traders.
The Global Trade Research Initiative (GTRI) noted that the widening gap between standard import duties and UAE linked concessional rates could encourage more importers to channel shipments through Dubai. Analysts believe the UAE’s role as a major refining, trading, and re export center makes it well positioned to benefit from the new tariff structure.
According to reports, gold imported from the UAE currently faces an effective duty of around 14 per cent compared to the 15 per cent tariff applied to imports from other countries. While the difference appears small, experts say it can become highly significant in large volume bullion transactions.
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The CEPA framework also allows a gradually increasing quota for gold imports from the UAE. The quota reportedly began at 120 tonnes annually and is expected to rise steadily over the coming years. This mechanism is likely to strengthen trade flows between the two countries as Indian demand for precious metals remains strong, particularly during festive and wedding seasons.
Silver imports may also see increased movement through Dubai due to separate concessional tariff arrangements under the same agreement. India had already committed to progressively reducing duties on UAE silver imports over a ten year period beginning in 2022, creating an even larger duty advantage after the latest increase in general import tariffs.
Market observers say the policy change may lead to shifts in supply chains, with more international bullion being routed through Dubai before entering India. Traders are expected to closely monitor pricing trends, logistics costs, and currency movements in the coming months as the new tariff regime takes effect.
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Industry experts also warn that higher import duties could push domestic gold and silver prices upward in India, potentially affecting jewellery demand and retail consumption. At the same time, Dubai’s bullion market could benefit from increased trading activity as businesses adapt to the changing trade environment.
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The latest developments further underline the growing economic significance of the India UAE trade partnership, especially in sectors such as precious metals, energy, logistics, and investment.
