Gold and Silver Imports From Dubai May Rise After India Duty Hike, Says GTRI

India's sharp increase in import duties on gold and silver could lead to a significant rise in precious metal imports routed through Dubai under the India UAE trade agreement, according to the Global Trade Research Initiative (GTRI).

The Indian government recently raised customs duties on gold and silver imports from 6 per cent to 15 per cent in a move aimed at reducing non essential imports, protecting foreign exchange reserves, and supporting the rupee amid ongoing geopolitical tensions in West Asia.

However, trade experts believe the revised tariff structure may unintentionally make Dubai a more attractive import hub for bullion shipments into India. Under the India UAE Comprehensive Economic Partnership Agreement (CEPA), gold imported from the UAE continues to enjoy concessional duty benefits through a tariff rate quota mechanism.

According to GTRI, gold entering India through the UAE route would now attract an effective duty of 14 per cent, compared with the general 15 per cent Most Favoured Nation tariff applied to other countries. The think tank said this widening duty gap could encourage traders to route more global bullion supplies through Dubai despite the UAE not being a major producer of gold or silver.

The quota system under the CEPA agreement began in 2022 with an annual limit of 120 tonnes of gold imports and is expected to rise gradually to 200 tonnes by 2027. Experts say this could account for nearly one fourth of India's yearly gold imports.

Silver imports may also witness a similar trend. India had already agreed to reduce silver import duties from the UAE gradually over a 10 year period beginning in 2022. At present, concessional tariffs on silver imports from the UAE stand at 7 per cent, creating a substantial gap after India's latest increase in overall duties to 15 per cent.

GTRI Founder Ajay Srivastava said the growing difference in tariff rates could create major arbitrage opportunities for importers using Dubai as a trading route. The advantage is expected to widen further over the coming years as CEPA linked duties continue to decline toward zero by 2031.

The government's revised structure includes a rise in Basic Customs Duty from 5 per cent to 10 per cent and an increase in Agriculture Infrastructure and Development Cess from 1 per cent to 5 per cent. After including Integrated GST, the effective import levy on precious metals has reportedly surged to over 18 per cent.

India imported nearly $72 billion worth of gold during FY 2025-26, while silver imports reportedly recorded a massive annual jump of around 150 per cent. Analysts say the new duty structure could increase domestic bullion prices and impact jewellery demand, especially during festive and wedding seasons.