Page 13 - Bullion World Volume 04 Issue 08 August 2023

Bullion World | Volume 3 | Issue 8 | August 2023

UAE-India Comprehensive Economic

Partnership: Reflecting on the opportunities

created for Gold and Silver trade

Mr Sanjeev Dutta, Executive Director, Commodities and Financial Services, DMCC

Suppliers find it profitable to ship only where the Indian market is at least at
parity to the London spot price for transacting under CEPA. As a result total
exports under CEPA in the first year were less than 10 tonnes to India against
a target of 120 tonnes.

Global trade has an encouragingly
positive story to tell that may not A great example of new trade
be immediately obvious in times of agreements is the UAE-India
increased geopolitical and economic CEPA which entered into force
uncertainty. Key factors supporting on 1st May 2022 and redesigned
cross-border trade are strengthened the conventional flow of precious
services, digital innovation, and the metals trade with India. Assuming an Mr Sanjeev Dutta
increasing regionalisation of trade as average price of $1900 an ounce,
demonstrated through a raft of new Indian gold imports averages at $48
precious metals trading is one of
free trade agreements, of which the bn at current rate of demand of which their core business activities. These
UAE’s Comprehensive Economic UAE’s share will be near 15. The
banks lease approximately $7 billion
Partnership Agreement (CEPA) CEPA has created the potential to to banks licensed in India to import
programme is a standout example. increase the UAE’s share of gold to
gold on behalf of their customers.
These are increasing the economic India to nearly 30% by 2025, which Approximately $9 billion is imported
clout of growing economies and at current rate would be near $15
for re-export after fabricating to
lowering barriers for greater trade bn. Similar opportunities now exist to jewellery, and $14 billion is imported
growth between partners. supply silver at a preferential rate to
as doré at a concessional duty of
India. 0.65%. That leaves a balance of $18
These were just some of the findings billion (~300 tonnes) imported for
in Dubai Multi Commodities Centre’s Gold trade: domestic consumption on outright
2022 Future of Trade report, our India imports gold in two forms:
purchase.
flagship report series which takes unrefined in gold-silver doré bars and
an in-depth look into the global refined bullion. The refined bullion is
For a market potential of ~300
drivers of trade in what we called in supplied by only a handful of precious tonnes, the supply of gold through the
last year’s edition the “New Era of metals dealers based in UAE and
CEPA could increase to 200 tonnes
Multilateralism”. about ten global banks where
to $12 bn over the next four years

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