Page 22 - Bullion World Volume 4 Issue 3 March 2024
P. 22

Bullion World | Volume 4 | Issue 3 | March 2024

               India's FTA Negotiations with Peru:


                Tariff Concession on Gold can be a

                              Major Concern for India




                           Mr Ajay Srivastava, Founder, Global Trade Research Initiative










              India's Free Trade Agreement (FTA)
              negotiations with Peru represent a
              significant step towards deepening
              economic ties between the two nations,
              aiming to boost bilateral trade and
              investment.


              Since 2017, both countries have been
              actively engaged in discussions to
              finalize an FTA that could transform
              their economic relationship.










           Gold is a major concern for India.
           Tariff concessions on Gold, accounting for US$1.8 billion
           or 80% of India's imports from Peru in FY2023 is the
           most challenging issue for India.
                                                                           Mr Ajay Srivastava
           Gold, a high-value product with low volume, attracts
           a 10% basic customs duty in India. Even minor tariff
           concessions could lead to a significant increase in
           imports. For instance, after tariff concessions under the   India's bound duty on gold is set at 40%, but the current
           India-UAE Free Trade Agreement, gold imports from the   applied tariff is 10%. Free Trade Agreements (FTAs) offer
           UAE, India's second-largest gold supplier, doubled in the   concessions on effective duties rather than on the bound
           calendar year 2023 compared to 2022.               duty.


           Peru, the fifth-largest supplier to India, could see a   Excluding gold from an FTA would violate the World
           similar surge in gold imports if concessions are made.   Trade Organization's Article XXIV, which requires duty
                                                              cuts on substantial trade for FTAs.
           In 2023, India's global imports of unwrought gold were
           estimated at US$43 billion, with Switzerland accounting   India’s bound duty on Gold is 40% and current applied
           for 40% of these imports.                          tariffs are 10%.


           Given Peru's gold mines, its gold would easily meet any   FTAs allow concessions in effective duties and not on
           Rules of Origin criteria.                          bound duty.


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