India-UAE trade deal: Gold imports under preferential quota route remain virtually closed

India’s gold imports from the United Arab Emirates through the free trade agreement have not seen much uptake following court cases around the process of allocation of quotas by the Director General of Foreign Trade. According to government and industry sources, the CEPA door for gold imports remains virtually closed although the precious metal continues to be imported from the UAE through normal channels.

This comes at a time when there were concerns that the India-UAE Comprehensive Economic Partnership Agreement (CEPA) could continue to lead to higher gold and silver imports despite the Centre more than doubling import duty on these items.

“Gold imports through the UAE trade route have been closed,” sources familiar with the development said.

According to an industry source, importers have not been using the tariff rate quota under the CEPA for imports. “Gold is being imported from the UAE but without use of the trade deal due to the court cases. India is also importing gold from various other countries like Switzerland,” the source explained.

The Centre had on May 12 more than doubled the customs duty on gold and silver to 15% from 6% as a measure to contain forex reserves and the current account deficit amidst the West Asia crisis.

The Directorate General of Foreign Trade also took measures to further restrict imports, including moved silver into the restricted category of imports meaning that importers now need a license for silver imports and had also capped duty-free gold imports at 100kg per license under the advance authorisation scheme.

However, concerns were raised that despite this move, gold and silver imports could continue to rise due to provisions of the India-UAE Comprehensive Economic Partnership Agreement (CEPA) that give preferential access to the precious metal.

This was because of the preferential access through the India-UAE CEPA to gold and silver. Under the agreement, gold imports from the UAE enjoy preferential access and India had allowed imports from Dubai at tariffs one percentage point below the normal Most-Favoured-Nation (MFN) rate through a Tariff Rate Quota (TRQ) system.

As per official data, India’s total gold imports stood at 795 tonne in 2023-24 and 757 tonne in 2024-25. A recent PTI report had said that the share of imports under the TRQ mechanism was only about 5% or 40 tonne in FY24 and 18% or 140 tonne in FY25. In FY26, the allocated quantity under the mechanism was 8.58 tonne.

Previously, the DGFT had also extended the validity of TRQ Authorisation for import of gold under India-UAE CEPA till June 30 due to the ongoing geopolitical issues.

Sources said the higher import duty has led to a lower import of gold in the last one month. “Measures to curb gold imports are not enough and can never be enough in a country like India where gold is purchased as an investment, as a safe haven, as a blessing, for auspicious occasions and weddings…” they noted.

India is the world’s second-largest gold market. It imported 45.6 tonne of gold in April. Industry sources said that along with the gold duty hike, sales have been low due to lesser demand old stock continues to remain in the country.