India's Bullion Market Shifts: Duty Reduction Halts Silver and Platinum Imports from UAE

India's reduction of import duties on gold and silver from 15% to 6% has halted the import of silver and platinum from the UAE. Previously benefiting from the Comprehensive Economic Partnership Agreement (CEPA), importers now find no incentive to bring these metals under the agreement, resulting in significant disruptions in trade.

India's recent decision to slash import duties on gold and silver from 15% to 6% has ended the profitable import of silver and platinum from the UAE, according to trade and government officials. This move effectively erased the duty arbitrage that bullion dealers had been exploiting under the Comprehensive Economic Partnership Agreement (CEPA), leading to a major shift in the bullion market.

The reduction has rendered the previously beneficial CEPA terms obsolete, explained Prithviraj Kothari, president of the India Bullion and Jewellers Association (IBJA). 'Now that regular customs duty for silver is lower than the tax under the CEPA, nobody's importing silver anymore,' Kothari added. The significant drop in import duty has left no incentive for dealers, who had primarily imported silver from the UAE to benefit from an 8% duty compared to the previous 15%.

This has dramatically affected the UAE's share of India's silver imports, which saw a surge to 1,998 metric tons in the first five months of 2024, but has since stalled. Nitin Kedia, national general secretary at the All India Jewellers and Goldsmith Federation, noted that platinum imports also ceased. According to sources, importers are now facing losses due to a sharp drop in global prices, leading to stranded shipments and the need to either re-export or sell at a discount.

(With inputs from agencies.)