India Seeks Review of UAE Trade Agreement Amid Concerns Over Precious Metal Imports

India is reviewing certain provisions of the Free Trade Agreement (FTA) with the United Arab Emirates (UAE) from May 1, 2022. The development was confirmed by Commerce Minister Sunil Bartwal. The UAE is moving forward by focusing on value-added regulation and reducing customs duties.

Importance of the UAE as a trading partner

UAE – Bilateral trade is expected to reach US$83.65 billion in 2023-24. The Comprehensive Economic Partnership Agreement (CEPA), which facilitates this trade, is now under scrutiny as Indian officials reassess its terms.

Key Issues: Value Addition Norms and Customs Duty

Partwal noted that the review focuses on two main concerns: value addition norms and customs duty reduction. The negotiations are aimed at addressing the increased imports of precious metals, especially silver, under the current agreement.

Concerns over Precious Metal Imports

Experts have expressed concern over the rampant import of precious metals from the UAE under CEPA. Expressing concern that unlimited imports of gold, silver, platinum and diamonds from the UAE could soon be subject to zero tariffs, the Global Trade Research Initiative (GTRI) has called for an urgent review. This scenario will lead to significant revenue loss for India and change in import trade dynamics.

The main issue is the potential drop in duty on gold imports from Dubai, which will fall to zero within three years if it contains 2% platinum. GTRI also noted that many imports may not meet the origination rules, which would disqualify them from preferential treatment under CEPA.

Review of IT Hardware Import Authorization and Other Trade Agreements

In addition to precious metals, discussions are ongoing on import permits for IT hardware products. The Indian government may reconsider the current regime, which was relaxed last October, allowing for easier import procedures.

India is also actively involved in trade negotiations with other countries. Negotiations on the India-Australia Comprehensive Economic Cooperation Agreement (CECA) and the India-UK Free Trade Agreement (FTA) are ongoing. The ninth round of talks with the European Union (EU) will be held in New Delhi in September to address key trade issues and concerns of Indian stakeholders.

Looking Forward
India’s active stance on the CEPA review with the UAE reflects its commitment to protect its economic interests. The outcome of these negotiations could have a significant impact on India-UAE trade relations and shape the future of India’s international trade agreements.