According to a government source, India is unlikely to provide any gold tariff concessions in its proposed free trade deal with the Gulf Cooperation Council (GCC), indicating a cautious approach to precious metals trade liberalization.
The individual, who asked to remain anonymous, stated, “It is quite doubtful that we will do so with the GCC because we did not include it in the trade pact with Oman.”
To safeguard domestic interests, India specifically left gold and silver bullion, along with other sensitive goods, off the list of commodities eligible for tariff discounts in the Comprehensive Economic Partnership Agreement (CEPA) with Oman, which was signed in Muscat on December 18.
Earlier this month, India and the six-member Gulf Cooperation Council (GCC), which consists of the United Arab Emirates, Saudi Arabia, Qatar, Kuwait, Oman, and Bahrain, agreed the terms of reference to formally begin trade agreement negotiations. The talks had been on hold for nearly twenty years.
The negotiations’ terms of reference involve investment, commerce in goods and services, customs processes, trade barriers, and dispute resolution procedures.
Tariff concessions on precious metals under the trade deal with the UAE led to a dramatic increase in imports, which sparked worries about disruptions to the domestic market.
India provided bullion tariff discounts, enabling the importation of a predetermined amount of gold at a reduced customs duty of 1%. Imports of gold from the UAE nearly tripled as a result, rising from $5.8 billion in FY22 to approximately $16.8 billion in FY25.
In May 2022, the CEPA between the UAE and India went into force. Trade policy specialists have pointed out that certain bullion imports under the India-UAE CEPA took advantage of concessional tariffs and failed to comply with the stringent rules of origin criteria, which has led to regulatory tightening to prevent such abuse.
The UAE and Saudi Arabia are two of New Delhi’s biggest regional allies, and bilateral trade between India and the GCC has increased dramatically over the years, reaching $179 billion in FY25.
In addition to importing energy products like crude oil, LNG, and LPG, India exports a variety of goods to the Gulf, including food items, textiles, jewelry, pharmaceuticals, and engineering supplies.
Adrija Chatterjee works for Moneycontrol as an assistant editor. For more than eight years, she has been monitoring and reporting on the ministries of trade and finance.
