In a significant move, the Modi government has paved the way for a potential drop in gold jewelry prices in India. The central government has granted approval for the import of substantial gold quantities from the United Arab Emirates (UAE). This decision, falling under the Free Trade Agreement, allows for the import of gold from the UAE with concessional duty rates. Two undisclosed sources shared this information, highlighting that a majority of the gold imports into India would benefit from this arrangement. Jewelers authorized by the Reserve Bank of India (RBI) have been granted permission to import gold from the UAE.
Key Details of the Decision
The government has decided to provide a one percent duty advantage for the import of 140 tonnes of gold into India during the fiscal year 2023-24. A recent notification from the Revenue Department outlined the eligibility criteria for availing the benefits of the tariff rate quota. The International Financial Services Center Authority has communicated this information to eligible jewelers through the India International Bullion Exchange.
Trade Agreement Terms
Under the trade agreement, the UAE has extended immediate zero-duty market access to India for the export of gold jewelry. This is in exchange for a tariff rate quota, which previously incurred a 5 percent import duty. The allocated gold import limits are set at 110 tonnes for the fiscal year 2022-23 and 140 tonnes for 2023-24. The plan involves a gradual increase in gold imports, reaching 200 tonnes over the next five years. Trade experts highlight that Indian importers can now bring in gold from the UAE with a reduced tax rate of 14 percent, down from the previous 15 percent.
Impact on Gold Jewelry Prices
Ajay Sahay, Director General of the Federation of Indian Export Organization, emphasized that the government’s one percent concession in import tax is expected to lead to a reduction in gold jewelry prices. Ashok Seth, Northern Region Chairman of the Gem Jewelry Export Promotion Council, acknowledged the government’s decision under the Free Trade Agreement as a significant step in this direction.
