The significant increase in India’s import duty on gold, rising from 6 percent to 15 percent, may lead to a surge in gold imports from Dubai via the free trade agreement route, according to a report by the Global Trade Research Initiative (GTRI) released on Wednesday.
The GTRI noted that this duty hike alters the economic landscape for precious metal imports routed through the United Arab Emirates under the India-UAE Comprehensive Economic Partnership Agreement (CEPA). India has permitted gold imports from Dubai at a tariff one percentage point below the normal Most-Favored-Nation (MFN) rate through a Tariff Rate Quota (TRQ) system. This quota commenced at 120 tonnes annually in 2022 and is projected to increase to 200 tonnes by 2027, which constitutes nearly one-fourth of India’s yearly gold imports.
“With the new MFN tariff structure elevating effective duties to 15 percent, gold imported under the UAE quota would enter at 14 percent,” GTRI stated. They suggested that the widening tariff gap may encourage greater routing of international bullion through Dubai, despite the UAE not being a gold or silver producer.
The CEPA also stipulates a gradual reduction of import duties on silver from 10 percent to zero over a ten-year span starting in May 2022. Currently, the concessional tariff on silver imports from the UAE stands at 7 percent.
Ajay Srivastava, Founder of GTRI, remarked, “With India now raising the general tariff to 15 percent, the duty gap has widened to 8 percentage points, creating a crucial arbitrage opportunity for imports routed through Dubai. This margin is expected to further increase until CEPA tariffs reach zero by 2031.”
Previously, gold and silver imports were subject to a 5 percent Basic Customs Duty (BCD) alongside a 1 percent Agriculture Infrastructure and Development Cess (AIDC), resulting in a total levy of 6 percent. With the updated structure, the BCD has doubled from 5 percent to 10 percent, and the AIDC has increased five-fold from 1 percent to 5 percent. Consequently, this raised the total customs levy from 6 percent to 15 percent; including the 3 percent Integrated GST (IGST), the effective import duty has surged from 9.18 percent to 18.45 percent. This change occurs amid a significant rise in precious metal imports.
In the fiscal year 2025-26, India imported nearly $72 billion worth of gold, marking a 25 percent increase compared to the previous year. Meanwhile, silver imports exceeded a billion dollars, reflecting an extraordinary annual increase of 150 percent.
Furthermore, GTRI has urged the Finance Ministry to simplify the language in notifications regarding these tariff changes, citing their complexity. The current framework requires importers, legal experts, and consultants to navigate references to customs notifications issued over the past 26 years. Determining the applicable duty has become increasingly convoluted due to multiple layers of amendments, corrections, and tariff changes issued over several decades.
Published on May 13, 2026.
