A decisive policy shift by India has halted concessionary silver and platinum imports from the United Arab Emirates (UAE). Benefiting from lower duties under the Comprehensive Economic Partnership Agreement (CEPA) between the two nations, these imports have now ceased following the reduction of import duties.
India, the world’s second-largest bullion consumer, recently slashed import duties on gold and silver from 15% to 6%. This move removed the incentive to import silver and platinum under the CEPA, as confirmed by Prithviraj Kothari, president of the India Bullion and Jewellers Association (IBJA).
“Now that regular customs duty for silver is lower than the tax under the CEPA, nobody’s importing silver anymore,” Kothari stated. Bullion dealers had previously imported silver from the UAE due to the 8% import duty under CEPA, compared to the regular 15%. This preference enabled the UAE to capture nearly half of India’s silver imports, with shipments surging to 1,998 metric tons in the first five months of 2024, up from 133 tons during the same period last year.
The regular duty reduction to 6% has rendered imports via CEPA financially unviable. As a result, bullion dealers have refrained from clearing silver and platinum shipments under the CEPA, a government official noted.
Platinum imports also felt the impact. Nitin Kedia, national general secretary at the All India Jewellers and Goldsmith Federation, reported a surge in platinum imports during the four weeks from mid-June, surpassing the total for 2023. Bullion dealers exploited a loophole by registering alloys containing around 90% gold as platinum to avoid higher duties.
Changes in the duty structure left around six tons of silver and two tons of platinum alloy stranded, leading to major financial losses for importers amid a sharp decline in global prices. A Mumbai-based bullion dealer mentioned, “Importers must now either export silver grains back to the UAE or sell them at a discount in the Indian market.”
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