GTRI – Artifex.News https://artifexnews.net Stay Connected. Stay Informed. Mon, 17 Jun 2024 06:55:35 +0000 en-US hourly 1 https://wordpress.org/?v=6.6.1 https://artifexnews.net/wp-content/uploads/2023/08/cropped-Artifex-Round-32x32.png GTRI – Artifex.News https://artifexnews.net 32 32 Gold, silver import surges 210% in 2023-24 from UAE; need duty revision in FTA: GTRI https://artifexnews.net/article68299338-ece/ Mon, 17 Jun 2024 06:55:35 +0000 https://artifexnews.net/article68299338-ece/ Read More “Gold, silver import surges 210% in 2023-24 from UAE; need duty revision in FTA: GTRI” »

]]>

“While India’s total imports from the UAE fell 9.8% from $53.2 billion in FY23 to $48 billion in FY24, imports of gold and silver skyrocketed 210%, from $3.5 billion to $10.7 billion,” GTRI report said.
| Photo Credit: Reuters

“India’s gold and silver imports from its free trade agreement (FTA) partner UAE have skyrocketed 210% to $10.7 billion in 2023-24 and there is a need to potentially revise the concessional customs duty rates under the pact to mitigate the arbitrage driving this surge,” a report said on June 17.

Economic think tank Global Trade Research Initiative (GTRI) said this sharp rise in gold and silver imports is primarily driven by import duty concessions granted by India to the UAE under the India-UAE Comprehensive Economic Partnership Agreement (CEPA).

India allows 7% tariffs or customs duty concessions on import of unlimited quantities of silver and a 1% concession on 160 metric tonnes of gold. CEPA was signed in February 2022 and implemented in May 2022.

Additionally, India facilitates gold and silver imports by allowing private firms to import from the UAE through the India International Bullion Exchange (IIBX) in Gift City. “Previously, only authorised agencies could handle such imports,” the report said.

“While India’s total imports from the UAE fell 9.8% from $53.2 billion in FY23 to $48 billion in FY24, imports of gold and silver skyrocketed 210%, from $3.5 billion to $10.7 billion,” it said.

“Import of all remaining products fell 25%, from $49.7 billion in FY23 to %37.3 billion in FY24,” it said. GTRI Founder Ajay Srivastava said the current import of gold and silver from the UAE is unsustainable as the UAE does not mine gold or silver or add sufficient value to imports.

“High import duties in India on gold, silver, and jewellery at 15% are at the root of the problem. Consider lowering tariffs to 5 per cent. This will cut large-scale smuggling and other misuse,” Mr. Srivastava said.

Trade in gold, silver, and diamonds has been prone to misuse due to their low volume but high value and high import duties in India. “Low tariff imports of gold, silver only benefit few importers who keep all profits arising through tariff arbitrage and never pass it to consumers,” he said.

Mr. Srivastava suggested the government implement certain measures to help India balance its trade policies, protect domestic revenue, and ensure fair competition in the import of precious metals and jewellery. It suggested reassessing and potentially revising the concessional duty rates under CEPA to mitigate the arbitrage driving the surge in imports of gold and silver.

“At least, implement yearly import quotas (tariff rate quotas) for silver, similar to those for gold, to control the volume of imports and prevent revenue loss,” it said, adding that India should rigorously verify the claimed value addition by Dubai-based refiners in gold and silver imports to ensure compliance with CEPA rules of origin.

It also asked to tighten regulations around the India International Bullion Exchange (IIBX) at Gift City to control the volume and nature of precious metal imports and the exchange should not allow country-based exemptions.

As increased imports contribute to a higher current account deficit and since gold and silver act more like financial instruments than regular trade items, India should avoid including them in any FTA.

“India has granted tariff concessions for these items in many FTAs and under the DFTP (duty-free tariff preference) scheme, so a comprehensive review is needed.

India announced the scheme for LDCs (least developed countries) in 2008. Under this, India provides duty free/preferential market access on about 98.2% of India’s tariff lines (or product categories).

Further, the report stated that silver imports from the UAE increased multifold to $1.74 billion in 2023-24 from a meagre $29.2 million in 2022-23 due to India charging an 8% duty under the CEPA versus a 15% duty from other countries.

“The large 7% tariff arbitrage resulted in a loss of revenue for India of ₹1,010 crore in FY24. Revenue loss will increase as India has committed to make tariffs zero on unlimited quantities of silver from the UAE within next 8 years,” it added.

It said this trade is unusual because the UAE just imports large silver and gold bars, melt and convert these into silver grains and unwrought gold for exports. “A check with global refiners will show that value addition in such process is much less than 1% as opposed to 3% required under the FTA,” it said.

On gold bars, the report said India agreed to import 200 metric tonmes of gold annually from the UAE with a 1% tariff concession and due to this gold imports rose 147.6% from $3 billion in FY23 to $7.6 billion in FY24, causing India to lose ₹635 crore in revenue in FY24.

Similarly, India’s jewellery imports have increased 187.6% from $1.1 billion in FY23 to $3.3 billion in FY24, whereas these imports from the UAE have increased 290% from $347 million in FY23 to $1.35 billion in the last fiscal.



Source link

]]>
High import duties; resisting pressure to open agricultural sector important to ensure India’s food security: GTRI https://artifexnews.net/article67694940-ece/ Mon, 01 Jan 2024 09:08:32 +0000 https://artifexnews.net/article67694940-ece/ Read More “High import duties; resisting pressure to open agricultural sector important to ensure India’s food security: GTRI” »

]]>

Maintaining high import duties on sensitive agricultural commodities like rice and resisting pressure to open up the domestic sector to low tariffs will be crucial for preserving India’s self-sufficiency and ensuring food security for its population, a report said on January 1.

Economic think tank GTRI (Global Trade Research Initiative) in its report said that India needs to cut its reliance on imported vegetable oils to promote better health outcomes and also reduce the import bill.

This will need educating consumers about the health benefits of using locally produced oils like mustard, groundnut, and rice bran in lieu of imported oils.

India is the world’s largest importer of vegetable oils, with imports estimated to double to $20.8 billion in 2023-24 from $10.8 billion in 2017-18.

It added that the U.S. and E.U. currently support agriculture by using the latest technology to maximise output, high tariffs (or import duties) to discourage imports and massive subsidies to push exports.

Developed and agricultural-exporting countries like Australia always push developing countries like India to cut duties and subsidies on agricultural commodities to push their exports.

India has built a high import tariff wall (30-100% on sensitive items) to check subsided imports. India also does not cut tariffs on sensitive items for even its FTA (free trade agreement) partners.

The report said that this has paid India with self-sufficiency in almost all products.

“India needs to continue with its current approach to not open the domestic agriculture sector to low tariff subsidised imports. Upholding high import tariffs on sensitive items and resisting pressure to open up the domestic agriculture sector to low-tariff subsidised imports will be crucial for preserving India’s hard-earned self-sufficiency and ensuring food security for its burgeoning population,” it said.

According to the UN’s Food and Agriculture Organisation, net cereal imports by developing countries will almost triple over the next 30 years while their net meat imports might even increase by a factor of almost five.

While most countries will be dependent on food imports, India is lucky to be self-sufficient in all agriculture and food items except vegetable oils.

India’s agricultural imports are estimated to touch $33 billion in 2023 which will be just 4.9% of total merchandise imports.

“This has become possible due to focus on policies like the green and white revolution, high import tariffs and active negotiations at the WTO (World Trade Organisation) to protect food security concerns for the 1.4 billion people over developed country pressure to open Indian agriculture to subsidised imports,” GTRI co-founder Ajay Srivastava said.

On the sugar sector, the report said that India is the world’s largest sugar exporter after Brazil, but this year, it will import sugar in vast quantities as the sugar imports are estimated to grow steeply by 385.4%, from $252 million in 2022 to $1,223.4 million in 2023.

Imports have increased in 2023 due to a decline in domestic production caused by weak rains.

India dominates the global sugar scene as the largest producer, consumer, and second-largest exporter. Its sugar industry, ranking second in agricultural-based sectors, employs millions.

“Despite this, the industry faces competitiveness challenges, relying heavily on subsidies, free power, and water, leading many times to overproduction and market volatility. Water scarcity compounds issues, threatening industry sustainability,” Mr. Srivastava said.

To thrive, the Indian sugar sector must aim to boost sugarcane yield from 55 to the global average of 70 tonnes per hectare, free from subsidies.

“Production uncertainties force frequent policy changes to keep local prices in control, but dissuading long-term investments and hindering strategic planning for future businesses,” he added.

Vegetable oil, pulses, and fresh and dry fruits account for 72.1% of agriculture imports of India in 2023. Vegetable oil is the largest import constituent, accounting for 51.9% of total agriculture imports of India.

India imports 4 types of oils: Crude Palm Oil (CPO), Soya Bean Crude Oil, Crude Sunflower Seed Oil, and Refined Bleached Deodorized (RBD) Palmolein.

The report said that imports in 2023 are set to decline by 18.6% to $17.1 billion compared to 2022, primarily due to a fall in import prices, not in quantities.

Further, it said that India’s pulses imports are expected to rise by 44% to surpass $2.7 billion in 2023 as compared to 2022.

The major pulses and import values in 2023 are Masoor (lentil) at $1.13 billion, Arhar/Tuar (pigeon peas) at $766 million, Urad (beans of vigna mungo) at $536 million, Rajma (kidney beans) at $120 million, and Kabuli Chana at $76 million.

India is the world’s largest producer and consumer of pulses. It aims to enhance domestic production and cut imports by introducing high-yielding, disease-resistant pulse varieties.

The key challenges include addressing water scarcity and mitigating market volatility issues.

“Major efforts extend to reclaiming fallow land, promoting intercropping, and focusing on rainfed areas. Also, the market and infrastructure support involve ensuring fair prices through Minimum Support Price (MSP), investing in storage and processing, and establishing direct marketing channels,” he said.



Source link

]]>