UAE to review India’s concerns over silver import surge: Centre

UAE to review India’s concerns over silver import surge: Centre

Sub : Eco

Sec : External Sector

Context:

• India raised concerns regarding a significant increase in imports of silver products, platinum alloy, and dry dates from the UAE during a meeting with officials from the Ministry of Economy of the UAE.
• The United Arab Emirates has agreed to examine the concerns raised by India.

Issues raised:

• The Indian government urged the UAE to ensure compliance with trade regulations under the Free Trade Agreement (FTA) that took effect on May 1, 2022.
• India asked UAE to verify compliance with the rule-of origin norms and ensure the rules are not circumvented.

Bilateral Trade:

• The UAE is India’s third-largest trading partner, with bilateral trade reaching $83.65 billion in the fiscal year 2023-24.

Surge in imports:

• India UAE CEPA allows unlimited imports of gold, silver, platinum and diamonds from the UAE into India.
• The Global Trade Research Initiative (GTRI) reported that gold and silver imports from the UAE increased by 210%, totalling $10.7 billion in 2023-24.
• The significant rise in imports has led India to call for a review of certain provisions of the FTA.

India-UAE Comprehensive Economic Partnership Agreement (CEPA):

• The Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE aims to enhance bilateral trade and investment.
• A critical component of this agreement is the Rules of Origin, which determine the nationality of a product and whether it qualifies for preferential tariff treatment under the CEPA.

Rules of Origin:

Rules of Origin are criteria used to define the national source of a product. Goods must meet specified criteria to qualify for reduced tariffs under the CEPA.

They play a crucial role in international trade by:

• Ensuring that the benefits of trade agreements are granted only to goods produced in the partner countries.
• Preventing the circumvention of trade barriers through third-party countries.

Tariff Concessions:

• India currently offers a 7% customs duty concession on silver imports and a 1% concession on 160 metric tonnes of gold.
• The GTRI claimed that many imports did not meet rules of origin norms and hence, did not qualify for concessions.

Proposed Designated Zone:

• India has requested that the Indian Jewellery Exposition Centre in Dubai be classified as a Designated Zone.
• This designation would allow domestic jewellery manufacturers, including non-registered entities, to benefit from concessional duties under UAE regulations.

Mutual Recognition Agreements:

• India also highlighted the necessity for both countries to establish mutual recognition agreements for professional bodies.
• This would enable professionals such as chartered accountants, lawyers, and nurses to provide services without the need for additional certification.