Page 14 - Bullion World Volume 04 Issue 08 August 2023

Bullion World | Volume 3 | Issue 8 | August 2023

(see Table 1). This is a rise from achievable. Possible stumbling shipment, which are high at 48 hours
an initial target of 140 tonnes – and blocks may come with regulatory as against regular shipments of less
$8 bn – in the CEPA’s second year, red tape such as the Import of than 12 hours. Further, the Indian
which is near the current annual Goods at a Concessional Rate of market has remained at a discount
average of gold imports from UAE to Duty or for Specified End Use Rules, through most of the period with zero
India outside the trade agreement. 2022 (IGCRS Rules) and linking it duty-rated supplies due to other
There is however an important with the eligible beneficiaries of the bilateral and multilateral agreements,
distinction. Under the CEPA, concession duty (The Tariff Rate disincentivising the exporter from
India may only import gold bars Quota holders -TRQ). The end-use UAE.
manufactured by a UAE Good rules have made it a requirement
Delivery Refiner. to validate (end-user TRQ holders) Suppliers find it profitable to ship only
usage by authorized importers. where the Indian market is at least
Of course, India and the UAE have a Such barriers left unaddressed will at parity to the London spot price for
trading relationship that is decades only increase costs of supplying gold transacting under CEPA. As a result
old. This should make for a smoother to India under the CEPA, eclipsing total exports under CEPA in the first
implementation of the agreement the benefits. Adding to the costs are year were less than 10 tonnes to India
and the increased gold targets bank guarantees and times to clear against a target of 120 tonnes.

Table 1: Import of gold into India
HS Code Descriptiont Tariff concession Standard Effective 1st 2nd 3rd 4th 5th
Duty Duty year year year year year
71081100 Non monetary TR (Tariff 12.50% 10% 120 140 160 180 200
gold powder concession/relief
of 1% in absolute
percentage terms,
TRQ of 200 tons
phased in 5 years)

71081200 Other unwrought TR (Tariff 12.50% 10% 120 140 160 180 200
forms of non- concession/relief
monetary gold of 1% in absolute
percentage terms,
TRQ of 200 tons
phased in 5 years)

71081300 Other semi- TR (Tariff 12.50% 10% 120 140 160 180 200
manufactured concession/relief
forms of non- of 1% in absolute
monetary gold percentage terms,
TRQ of 200 tons
phased in 5 years)

Silver trade: in this case, has shifted to the UAE In India, the effective customs duty on
The Indian market consumes $4 Good delivery refiners. Given the silver is at 15%, while importing under
to $5 bn of silver each year. The limited capacity for silver refining CEPA from UAE has allowed for the
preferential duty on silver under the in UAE, this could be a challenge phased elimination of tariffs over ten
CEPA therefore looks quite promising in the short term. Additionally the years to zero. Unlike gold, there are
from an Indian perspective. While the exporter and the UAE Good Delivery no caps on volumes for silver imports.
barriers to importing silver into India refiner from UAE are responsible for Instead, there is a requirement
are lower as per the agreement, the complying with the product-specific for change in the subheading of
onus to make good of the opportunity rules. the HS code (CTSH) during the

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