India to Tighten Scrutiny on UAE Gold Imports Amid Duty Hike and Rules of Origin Concerns

India to Scrutinize Certificates of Origin for Gold Imports from UAE Amid Duty Hike Concerns

India may intensify scrutiny of certificates of origin accompanying gold imports from the United Arab Emirates (UAE) due to fears that importers might increasingly use the concessional duty route following the recent hike in gold import duties, according to sources.

Indian authorities are in close contact with agencies and officials in the UAE to investigate the authenticity of certificates of origin issued for gold exports to India under the bilateral trade agreement framework. This verification process is ongoing, with agencies in both countries maintaining constant communication.

The issue of rules-of-origin has become a central point of contention in the debate over the agreement. Under the India-UAE Comprehensive Economic Partnership Agreement (CEPA), only products that meet the prescribed origin criteria are eligible for tariff concessions. However, trade policy analysts and government authorities have raised concerns that precious metals imported into the UAE from other countries may undergo limited processing before being re-exported to India, leading to demands for stricter checks and tighter enforcement of origin norms.

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The CEPA framework has gradually expanded concessional access for UAE gold imports under the Tariff Rate Quota (TRQ) mechanism. Under the agreement, India agreed to allow up to 200 metric tonnes of gold imports annually from the UAE at a concessional duty rate. India notified a concessional quota of 140 tonnes in FY24, which was increased to 160 tonnes for FY25.

The issue could be raised during Prime Minister Narendra Modi's official visit to the UAE on May 15, with concerns surrounding concessional gold imports under the India-UAE CEPA and tighter rules-of-origin enforcement expected to feature in broader trade discussions.

Commerce Minister Piyush Goyal has previously indicated that India is examining operational aspects of the agreement amid concerns over rising bullion imports and potential misuse of preferential tariff provisions. The government recently hiked import duty on gold and silver to 15 percent from 6 percent, with the revised rates taking effect from May 13.

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The implementation of the India–United Arab Emirates Comprehensive Economic Partnership Agreement (CEPA), which came into force on May 1, 2022, introduced a concessional tariff framework for gold imports from the UAE through a Tariff Rate Quota (TRQ) mechanism. Under the agreement, eligible gold imports accompanied by valid certificates of origin receive a preferential customs duty benefit of 1 percentage point compared with the standard import duty applicable to other sources.

Following India's increase in gold import duty to 15 percent, CEPA-compliant UAE gold imports continued to enjoy a lower effective duty rate of 14 percent.