Jewelery companies in the United Arab Emirates and India are set to benefit from a key trade deal which will come into effect on Sunday.

Sweeping changes will be introduced as part of the Comprehensive Economic Partnership Agreement signed in February and jewelers are optimistic as rules for importing gold bars from the United Arab Emirates and jewelery from India have been revised.

Import duties, previously 5%, have been waived for jewelry exported to the UAE from India under the pact.

This will give Indian jewelers duty-free access to the UAE market.

India agreed to a concession of 1% on tariffs on gold imports from the United Arab Emirates up to 120 tonnes of gold in the first year, increasing to 200 tonnes in five years.

The Indian government has said this gives the export of UAE gold bullion or bullion a significant advantage “in perpetuity” over the tariff India charges the rest of the world..

Analysts and jewelers said The National that Dubai would become a major gateway for Indian jewelry to markets in the Middle East, North Africa and Central Asia.

The new trade pact is also expected to help India become attractive as a jewelry manufacturing hub with more global brands likely to make the country their production base.

India is one of the biggest consumers of gold in the world and imports about 800 tons of gold every year.

The country imported about 70 tons of gold from the United Arab Emirates in 2020-21.

Jewelry is a gateway to the world

Chandu Siroya, managing director of Siroya Jewellers, expressed optimism about the outlook for the sector.

“Jewellery is a question of aspiration, of emotion. Dubai is known as the city of gold. For anyone coming to the UAE, gold is high on their wish list,” said Siroya, who is also Vice Chairman of Dubai Gold and Jewelery Group.

“Dubai is a jewelry destination of the world and jewelers from all over the world come to Dubai to source their jewelry.

“When I can offer Indian jewelry at a competitive price, why will jewelers go to another country.

“It will be a win-win situation for the UAE and India.”

Inside the company’s wholesale office in Dubai’s Deira Gold Souk, staff arranged glittering adornments in white trays and arranged sparkling diamonds in rows.

The family business is one of Dubai’s largest wholesalers, supplying jewelry to over 30 countries.

It will soon open a third retail store in the United Arab Emirates.

“We import jewelry from everywhere,” Mr. Siroya said.

“This trade agreement with India is fantastic because it will strengthen the position of the United Arab Emirates.

“Now a lot more Indian jewelry will be channeled through Dubai as there will be no additional customs duties and this will lead to further increase in business.

“If a person living in America wants to buy Indian jewelry, where else will they also get jewelry made in Turkey, Singapore, Italy, Germany and the Far East under one roof in half a square kilometer.”

He was referring to Dubai’s Gold Souk where visitors from all over the world walk down narrow paths browsing display cases filled with golden belts, delicate rings and chains studded with sparkling gemstones.

He said global companies would be keen to establish themselves in India as a result of the trade deal.

“India has some of the best handmade artistic jewelry and also has the capability to make modern jewelry using the latest technology,” Siroya said.

“Many international companies will want to establish a base in India to take advantage of the Middle East market. They can produce in India for the local market and also export to Dubai.

bright future

The trade deal was hailed as a new phase of strategic cooperation that would boost non-oil trade between the two countries to $100 billion in five years from $60 billion currently.

India’s Commerce Secretary, BVR Subrahmanyam, said the gems and jewelery industry was enthusiastic about the partnership.

“We gave them [UAE] a CT [tariff rate quota] of 200 tons where the tariff [or import duty] in perpetuity will be one percent less than anything charged for the rest of the world,” he told media in India in February.

“The UAE is becoming a very big entry point for us to enter the rest of the world, the Middle East, North Africa and Central Asia.”

Small businesses will thrive

Surendra Mehta, national secretary of the India Bullion and Jewelers Association, said exports to the UAE will soar.

“We could see a more than 100% increase in jewelry exports in the coming years,” he said.

“For Indian exports, this is a great initiative. This will open the floodgates for export.

The move will also open the door for smaller Indian gold companies looking to reach larger markets.

“It will be an ideal entry point for handcrafted Indian jewelry which can see a very large market across Dubai,” Mr Mehta said.

“It used to be difficult for small Indian entrepreneurs to look for importers in other countries, but with Dubai it becomes very easy. It’s a big gold market, it’s near India and people don’t hesitate to trade there.

“So if anyone wants to cater to the US or UK market, Dubai is the right gateway.”

The UAE accounts for 80% of India’s gold jewelry exports and 20% of studded jewelry exports.

Gemstone and jewelry exports to the UAE dropped to US$1.18 billion in 2020-21 during the Covid-19 pandemic.

With the duty waiver, India’s Gems and Jewelery Export Promotion Council said it was confident that exports of gold jewelery and gold studded jewelery from India to the UAE would reach 10 billion dollars in 2023.

Updated: May 01, 2022, 10:02 a.m.