Dubai: In a major push, India has widened the scope of those who can benefit from the 1 per cent lower import duty on gold from the UAE, effective immediately. Apart from gold manufacturers and retailers, these imports can also be accessed by bullion traders in India – a move which could immediately lead to higher demand for gold from the UAE.

This means from now on gold traders too will benefit from importing their requirements at 14 per cent rather than the 15 per cent charged on shipments from other countries.

The timing of the announcement by the Indian government says a lot, coming as it does just ahead of the first anniversary of the May 1 CEPA (Comprehensive Economic & Partnership Agreement) deal coming into effect. It was with India that the UAE entered its first CEPA trade and investment agreements, and these 12 months have seen decisive breakthroughs in transaction flows across sectors.

The gold trade was seen as one of the biggest category winners from the UAE-India CEPA. Last year, the quote of gold imports into India from UAE was set at 120 tonnes, and rising to 140 tonnes for the current financial year.

“The latest decision will mean a level playing field as India’s bullion traders too can benefit from the duty cut on UAE imports,” said Shamlal Ahamed, Managing Director for International Operations at Malabar Gold & Diamonds. “What this does is ensure that all of the 140 tonne quota this year could be taken up.

“Also, by involving bullion traders to bid for this, it would create a significant secondary market demand for UAE bullion in India.”

More to follow...