New Import Duties Could Drive Demand for Dubai Gold, Says GTRI

The increase in import duties on gold and silver may result in higher shipments entering India through Dubai under the India-UAE trade agreement, according to the Global Trade Research Initiative (GTRI), as per PTI news report. 

The government has raised the Basic Customs Duty (BCD) on both metals from 5% to 10%. The Agriculture Infrastructure and Development Cess (AIDC) has also been increased from 1% to 5%. 

With these changes, the total customs levy on gold and silver imports has risen from 6% to 15%. After adding the 3% Integrated GST (IGST), the effective import duty now stands at 18.45%, compared with 9.18% earlier. 

UAE Imports Attract Lower Tariff 

Under the India-UAE Comprehensive Economic Partnership Agreement (CEPA), India allows imports of gold from the UAE at concessional rates through a Tariff Rate Quota (TRQ) system. 

The quota was fixed at 120 tonnes per year when the agreement came into effect in 2022. It is scheduled to increase gradually to 200 tonnes by 2027, accounting for nearly one-fourth of India’s annual gold imports. 

GTRI said gold imported through the quota route from the UAE would now attract a 14% customs duty, lower than the standard 15% rate applicable to other imports. 

The think tank said the wider tariff gap could lead to more bullion being routed through Dubai, even though the UAE is not a major producer of gold or silver. 

Silver Imports Also Under Watch 

India had also agreed under CEPA to reduce import duties on silver from 10% to zero over a 10-year period starting May 2022. 

At present, silver imports from the UAE attract a concessional tariff of 7%. According to GTRI Founder Ajay Srivastava, the increase in the general duty structure has widened the difference between regular and concessional tariffs to 8 percentage points. 

Import Bill Rises 

India imported nearly $72 billion worth of gold in FY26, about 25% higher than the previous year. Silver imports also recorded a sharp rise, increasing 150% year-on-year. 

GTRI has also asked the finance ministry to simplify customs notifications, saying the current system requires importers and consultants to refer to several old amendments and tariff changes to calculate applicable duties. 

Read More: GST Council May Review Tax Rules for Uber, Ola and Rapido Amid Ride-Hailing GST Confusion: Reports! 

Conclusion  

The revised duty structure has widened the tariff gap under the India-UAE trade pact, potentially increasing precious metal imports routed through Dubai. 

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