Indian jewellers can 'easily' take more gold from UAE at 5% customs duty

CEPA deal allows India to import 120 tonnes - and then 10% more a year

Dubai: Gold and diamond jewellers in India can easily take on the 10% increase to the 120 tonne a year offtake of bullion from the UAE to India under the 2022 CEPA agreement.

“India’s jewellers have already used the 120 tonnes of bullion allowed from the UAE for 2023-24,” said Nirav Bhansali of India’s Gem & Jewellery Export Promotion Council, an industry grouping. “This year’s going to be the same, and such is the demand from the likes of Tanishq, Malabar, Joyalukkas, and others that there’s not enough to meet all the demand.

“So, every jeweller in India is awaiting the 10% annual increase in bullion offtake allowed under the UAE-India CEPA (Comprehensive Economic Partnership Agreement).”

What CEPA allows

Under the deal with India, UAE can export up to 120 tonnes of bullion at 5% customs duty. This compares with the 6% India’s jewellers have to pay for gold sourced in any other country/ (It was 15% at one point until the Indian Finance Minister Normala Sitharaman slashed it to 6% in the last budget.)

“Even after the gold import duty cut, sourcing from the UAE at 5% actually works out to savings of 1.2 tonnes for India’s jewellers,” said Bhansali. “Especially at the current gold prices, that 1% lower customs duty represents outsized savings.”

Also under the CEPA deal, Indian jewellers will be allowed to increase their UAE gold offtake by 10% a year in the medium term. This is what they are now waiting for.

“Only one number is necessary to show how important CEPA was for Indian jewellers,” said Bhansali. “Of the $80 billion in India-UAE trade, jewellery made up 25%.”