The UAE received its first duty-free imports from India on Tuesday containing gold and jewellery items valued at $1 million.
Just two days after the landmark Comprehensive Economic Partnership Agreement came into effect, three packages containing gems, jewellery and gold arrived from India.
With the previous 5 per cent duty on the items now scrapped under the new agreement, the first customers to import duty-free goods saved about $50,000 in tax.
In recognition of the first goods to be imported under CEPA, Sunjay Sudhir, India's Ambassador to the UAE, and Juma Al Kait, assistant undersecretary of International Trade Affairs at the Ministry of Economy, handed the items to representatives from Malabar Gold and Diamonds, Siroya Jewellers and Jewel One Jewellers.
“The first consignment had an approximate value of about $1 million,” said Mr Sudhir.
“Prior to the signing of CEPA, the duty would have been charged at 5 per cent but today it was zero per cent.
“On day one of CEPA coming into force, 90 per cent of India’s export by volume has now become duty-free and I think today’s momentous occasion has started things off with a bang.”
While the UAE received its first consignment of goods from India on Tuesday, a similar shipment was sent to India from the UAE under the agreement.
Bright future for trade and investment
Gold and jewellery constitutes a big portion of the bilateral trade between the UAE and India and both Mr Sudhir and Mr Al Kait said CEPA will help clean up the sector and enable better business.
“Between our two countries, gold, gems and jewellery are such important items,” said Mr Sudhir.
“For example, to go by our figures from last year where our financial year is from April to March, India imported about $14 billion worth of gold and unpolished gems and exported about $5 billion worth of jewellery.
“To incentivise trade by breaking down the duties and institutionalising mechanisms for easier import or export, I think things become much better for business.
“Now the governments have made their move, it is up to the private sector to capitalise on this agreement and boost trade and investment between both countries.”
The benefits of CEPA include enhanced market access, lower or eliminated tariff rules, simpler customs procedures, clear and transparent rules and rule-based competition.
By establishing wider CEPA networks with global counterparts, Mr Al Kait said it will reinforce the UAE’s position as a global hub for gold and diamonds.
“Gold and jewellery constitute a big portion of the bilateral trade between the UAE and India and through our CEPA networks [we are] committing ourselves as a country to respect all international rules when it comes to the goods delivery process,” he said.
“A few months ago we announced the [Good Delivery Standard] for gold.
“We think this process will help and protect traders and also clean the global markets from unwanted trade in this important sector.”
The Good Delivery Standard for gold will be a publicly-accessible system for monitoring imports and exports of gold and aims to bring the UAE's practices closer to those used by the Organisation for Economic Co-operation and Development.
The UAE and India signed the CEPA in February and it came into effect on May 1.
The pact is expected to boost non-oil trade between the two countries to $100bn in five years from $60bn currently, opening additional avenues of investment.
In line with the move, the Ministry of Economy unveiled a new web page dedicated to CEPA, which provides information to companies and investors in the UAE who wish to capitalise on the benefits provided by the agreement.