Gold Duty Hike To 15% May Boost Imports via Dubai: GTRI

New Delhi, May 13 (KNN) A sharp increase in India’s import duty on gold—from 6 per cent to 15 per cent—could lead to higher inflows routed through Dubai under the India-UAE trade pact, according to the Global Trade Research Initiative (GTRI).

The think tank on Wednesday said the revised duty structure significantly alters the cost dynamics of precious metal imports under the India–UAE Comprehensive Economic Partnership Agreement (CEPA).

Under the agreement, India allows gold imports from the UAE at tariffs one percentage point lower than the standard Most-Favoured-Nation (MFN) rate through a Tariff Rate Quota (TRQ) system.

GTRI noted, "With the new MFN tariff structure taking effective duties to 15 per cent, gold imported under the UAE quota would enter at 14 per cent. The widening tariff gap could encourage greater routing of global bullion through Dubai, even though the UAE is not a miner of gold or silver," PTI reported. 

The TRQ for gold imports from the UAE was set at 120 tonnes annually in 2022 and is expected to increase to 200 tonnes by 2027, accounting for a significant share of India’s total gold imports.

Arbitrage Opportunity in Silver Imports

A similar trend may emerge in silver imports. Under CEPA, India has committed to reducing silver import duties from 10 per cent to zero over a 10-year period starting May 2022. The concessional tariff currently stands at 7 per cent.

GTRI Founder Ajay Srivastava said, "With India now raising the general tariff to 15 per cent, the duty gap has widened to 8 percentage points, creating a major arbitrage opportunity for imports routed through Dubai. That margin is scheduled to widen further each year until CEPA tariffs fall to zero by 2031," as quoted by PTI.

Overall Duty Burden Rises Sharply

Earlier, gold and silver imports attracted a combined customs levy of 6 per cent, comprising 5 per cent Basic Customs Duty (BCD) and 1 per cent Agriculture Infrastructure and Development Cess (AIDC). With an additional 3 per cent Integrated GST (IGST), the effective import duty stood at 9.18 per cent.

Under the revised structure, BCD has been doubled to 10 per cent and AIDC increased to 5 per cent, taking the total customs levy to 15 per cent. Including IGST, the effective duty has risen to 18.45 per cent.

Imports Surge, Clarity Sought

The duty hike comes amid a surge in precious metal imports. India imported nearly USD 72 billion worth of gold in FY 2025-26, about 25 per cent higher than the previous year, while silver imports recorded a sharp annual increase.

GTRI also urged the Finance Ministry to simplify tariff notifications, noting that the current framework is complex and requires stakeholders to track multiple amendments issued over several decades to determine applicable duties.

(KNN Bureau)