Gold duty under India-UAE pact raised in line with standard rate hike
Hey there! This news about gold duty might seem purely economic, but it's actually super important for your CLAT prep. Basically, India has significantly raised the import duty , that's a tax on imported goods , on gold coming from the UAE. It’s gone from 5% to 14% under our special trade deal, the Comprehensive Economic Partnership Agreement or CEPA. Why? Well, the government wants to reduce gold demand and control foreign exchange outflow, especially with the West Asia crisis impacting things. This move highlights how Free Trade Agreements (FTAs) like CEPA operate and how governments use tariffs as a tool. Pay attention to terms like 'Rules of Origin' and 'Tariff Rate Quota'. Bottom line for the exam: understand the interplay between international agreements, economic policy, and current global events. It's all connected!
The Finance Ministry has increased the import duty ongoldsourced from the UAE under the Comprehensive Economic Partnership Agreement (CEPA), raising the rate for the specified quota to 14 per cent from 5 per cent.
The move is in sync with the government’s decision on Wednesday to increase the standard import duty on the yellow metal to 15 per cent from 6 per cent in a bid to bring down demand and check forex outflow amid the West Asia crisis.
Under the India-UAE CEPA, gold imported through the Tariff Rate Quota (TRQ) enjoys a 1 per cent concession compared to the prevailing standard rate. The TRQ for gold at concessional duty under the CEPA started at 120 tonne in 2022, when the CEPA was implemented, and will reach 200 tonne in 2027.
India’s gold bar imports from the UAE surged to $16.5 billion in 2025 from $2.9 billion in 2022, while its share in India’s gold imports increased to 28 per cent in 2025 from 7.9 per cent earlier, pointed out the Global Trade Research Initiative (GTRI) in an analysis..
“The trend raises concerns because the UAE neither mines gold nor carries out major processing activity. Much of the trade appears to involve routing gold from third countries through Dubai simply to benefit from lower Indian tariffs,” it stated.
There are also chances of possible misuse of Rules of Origin (ROO) provisions and artificial processing aimed only at qualifying for tariff benefits, GTRI warned.
It recommended tighter origin rules, a review of precious metal concessions under FTAs, and exclusion of gold, silver, platinum, and diamonds from future trade agreements to protect India’s trade balance and foreign exchange reserves.