'Lesson learnt', India to keep gold, silver out of future FTAs to prevent rerouting

Gold and silver were deliberately excluded from preferential tariff treatment in the Oman agreement

• India to exclude gold and silver from tariff concessions in future FTAs
• Gold imports from UAE surged 188 percent after tariff concessions
• India seeks strategic silver supply from Peru and Chile amid global constraints

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India is likely to keep gold and silver outside tariff concessions in future free trade agreements (FTAs) for countries where rules of origin can be misused, even as it explores strategic supplies from key producers such as Peru and Chile, a senior government official said.

“We have learnt our lesson with the United Arab Emirates (UAE) and just like Oman, we will keep bullion out of such future trade agreements that we are negotiating,” the government official said.

Under the trade agreement with the UAE, tariff concessions on precious metals contributed to a sharp rise in imports, raising concerns over domestic market disruption. India offered tariff concessions on bullion, allowing imports of a specified quota of gold at a 1 percent concessional customs duty and silver imports from the Gulf nation at a 7 percent reduced duty.

This led to gold imports from the UAE rising by about 188 percent, increasing from $5.8 billion in FY22 to nearly $16.8 billion in FY25, while silver imports recorded a sharper jump of over 4,500 percent, climbing from under $10 million to around $449 million over the same period.

The Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE came into effect in May 2022.

Trade policy analysts have flagged that some bullion imports under the India‑UAE CEPA did not meet strict rules of origin requirements and exploited concessional tariffs, prompting regulatory tightening to curb such misuse.

Rules of origin are criteria used in trade agreements to determine where a product is made to ensure that only goods genuinely produced in partner countries receive concessional tariffs and prevent imports from being routed through third nations.

In the recent CEPA with Oman, which was signed on December 18 in Muscat, India explicitly kept gold and silver bullion, along with other sensitive items, out of the tariff concessions list to protect domestic interests.

This adds to India’s traditional stance of keeping sensitive agricultural products and dairy out of FTAs, as it has done in agreements with the United Kingdom, New Zealand, and the European Free Trade Association bloc.

India is negotiating trade deals with a range of countries and blocs, including the European Union, Peru, Chile, and Australia, where gold and silver production or trade is significant.

While keeping bullion outside tariff concessions will remain a priority to prevent a repeat of the sharp import surge seen under the UAE CEPA, India is also exploring these deals to secure strategic supply of silver from key producing countries like Peru and Chile amid global supply constraints.