India is seeking a review of its free trade agreement with the UAE, raising concerns about rising precious metal imports and potential revenue losses. Experts have highlighted concerns about tariff arbitrage and the impact on domestic businesses.
He said that India is in discussions with the UAE and there are various issues which can be discussed in the review.
The UAE is the third largest trading partner of India with USD 83.65 billion bilateral trade in 2023-24. The agreement is officially dubbed as Comprehensive Economic Partnership Agreement (CEPA).
“As regards CEPA, there are two things – one is the value addition norms and the second is reduction (of customs duties). So we are in discussion with them and there are various issues which are discussed under CEPA review. So, I think we are seeking a review with them and once we get it, then we will look at all the issues holistically,” he told reporters here.
He was replying to a question on increasing silver imports and cutting import duty on precious metals in the Budget and tariff arbitrage to the UAE.
“When you ( a country) give a concessional rate (of duty), there is a condition of meeting rules of origin. So when we do review, we look at all the aspects of it…whether the rules of origin are met or not and what is the future course of action that we will do,” Barthwal said.
The remarks assume significance as experts have raised serious concerns over the spurt in imports of precious metals from the UAE under the trade agreement.
Seeking an urgent review of the pact, think tank Global Trade Research Initiative (GTRI) has stated that the India-UAE CEPA allows unlimited imports of gold, silver, platinum, and diamonds from the UAE into India with zero tariffs in the coming years.
This will lead to significant annual revenue losses, move import business from banks to a few private traders, and replace top suppliers with Dubai-based firms, the GTRI report has said.
It highlighted that currently, gold can be imported from Dubai at 5 per cent duty, but this will drop to zero in three years if the alloy contains 2 per cent platinum.
GTRI has also claimed that many imports do not meet Rules of Origin conditions and, hence do not qualify for concessions.
Further, when asked whether the government is looking at reviewing the new authorisation regime for monitoring imports of certain IT hardware products, the secretary said, “When the appropriate time comes, we will take the call”.
On October 19 last year, the government tweaked curbs on imports of laptops and computers as it allowed importers to bring in shipments of IT hardware from overseas on a mere ‘authorisation’ upon detailing quantity and value.
The import authorisation is valid till September.
On India-Australia CECA (comprehensive economic cooperation agreement) negotiations, the commerce ministry informed that the 10th round of talks is expected to start from August 19-22 in Sydney.
The two countries have already implemented an interim pact and are in discussions to expand its scope.
On India, UK trade pact, it said that a virtual meeting between Commerce and Industry Minister Piyush Goyal and UK Secretary of State for Business and Trade Jonathan Reynolds was held in July to discuss the next steps on the pact.
The India-UK talks for the proposed free trade agreement (FTA) began in January 2022. The 14th round of talks stalled as the two nations stepped into their general election cycles.
Informing about the free trade agreement between India and the European Union (EU), the ministry said that the ninth round of talks is planned from September 23-27 here in the national capital.
Negotiations on two chapters – sustainable food systems and small and medium enterprises – have been concluded.
“During this (9th) round, both sides will discuss core trade issues covering goods, services, investments and government procurement along with necessary rules such as rules of origin, sanitary and phytosanitary measures, technical barriers to trade,” it added.
The concerns of Indian stakeholders with regard to the EU’s measures such as CBAM (carbon border adjustment mechanism) will also be discussed. PTI RR
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