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NEARLY 60 TIMES JUMP IN SILVER IMPORT FORM UAE UNUSUAL
Why in News ?
- Silver imports from the UAE to India surged by 5,853% from $29.2 million in FY23 to $1.74 billion in FY24, despite the UAE not being a producer of silver.
About the News
- Rule of Origin Concerns: The spike suggests possible rule of origin violations under the India-UAE free trade agreement (FTA), as UAE imports large silver bars and converts them into silver grains, claiming minimal value addition.
- Impact on Tariffs: India charges an 8% duty on silver imports from the UAE under the FTA, whereas imports from other countries face a higher 15% Most-Favoured-Nation tariff.
- Revenue Loss: The tariff differential has resulted in a revenue loss of Rs 1,010 crore for India in FY24, expected to increase as tariffs phase out to zero over the next eight years, potentially causing a cumulative loss of Rs 6,700 crore.
- Recommendations: The Global Trade Research Initiative (GTRI) calls for stricter monitoring of import volumes and verification of claimed value addition by Dubai-based refiners to prevent misuse and revenue loss. They also suggest reducing India’s high import duties on silver to 5% to curb smuggling and mitigate financial losses.
