Duty-free access for jewelery sector to get huge boost in exports under India-UAE trade pact: Comm secy
The national jewelry sector will get a huge export boost in the United Arab Emirates (UAE) market as it would gain duty-free access there, while the Gulf nation would get better access to the gold market here, as India will grant import tariff concessions. up to 200 tonnes, BVR Commerce Secretary Subrahmanyam said on Saturday.
India agreed to concessional import duties on gold imports of up to 200 tons per year. India imported about 70 tons of gold from the United Arab Emirates in 2020-21.
”We are a major importer of gold. India imports about 800 tons of gold every year. In this particular agreement we have given them (UAE) a tariff quota (tariff quota) of 200 tonnes where the tariff (or import duty) in perpetuity will be one percent less than whatever is the tariff charged for the rest of the world .
“Therefore, the UAE has a 1% price advantage on gold bullion. This 1% tariff difference means that those 200 tonnes will be diverted to the UAE,” the secretary told reporters here.
He said the biggest gain for India is “that we get duty-free access” to the UAE market for domestic jewellery.
There used to be a 5% tariff on Indian jewelery and now “it has dropped to zero”, so the gemstone and jewelery sector is “inflated”, he added.
Tariff quota is a quota for a volume of imports that enter India at specified tariffs. Once the quota is reached, a higher tariff applies to additional imports. Tariff quotas would also be there for copper, polyethylene and polypropylene.
India and the UAE on Friday signed a Comprehensive Economic Partnership Agreement (CEPA), under which a number of domestic products will enjoy duty-free access to the UAE market. The pact could come into force in April or May.
Asked about the inclusion of the digital trade chapter in the agreement, the secretary said that for the first time this sector is present in the trade agreement signed by India and it shows that India is ready to discuss it bilaterally.
”There will be a lot of harmonization in regulatory standards on how you handle digital trade between India and the UAE… We (India) are discussing digital trade or e-commerce with India. ‘European Union, Australia, United Kingdom and Canada,’ he said.
Explaining the chapter, Commerce Department Joint Secretary Srikar Reddy said it was a “best efforts” chapter where the dispute settlement mechanism would not apply.
”We are focused on how to harness the future opportunity for economic growth that digital trade offers.
“We have provisions in the chapter regarding paperless commerce, consumer protection, unsolicited commercial electronic messages, personal data protection, cross-border flow of information, and cooperation of digital products and electronic payments,” Reddy said.
The standards for customs duties on electronic transmission are linked to the current moratorium, which exists at the World Trade Organization (WTO).
Talking about the safeguard mechanism present in the India-UAE agreement, the Secretary said that there is a permanent safeguard mechanism which will come into effect in case of a sudden increase in imports.
He added that the agreement also contains the strictest rules of origin and value addition standards.
In general, the added value is around 30 to 35%. But, in this pact, it is about 40%, excluding gold and a few other high-value items.
“Trade diversion will not happen because of these strict value addition standards,” he added.
The “rules of origin” provision prescribes the minimum processing that should take place in the FTA country in order for the final manufactured product to qualify as originating in that country. Under this provision, a country that has signed an FTA with India cannot sell goods from a third country in the Indian market by simply affixing a label to them. He has to undertake prescribed value addition in this product to export to India. Rules of origin help contain the dumping of goods.
In order to protect sensitive sectors, India kept certain segments out of the scope of this agreement. These include dairy products, fruits, vegetables, cereals, tea, coffee, sugar, food preparations, tobacco, petroleum waxes, coke, dyes, soaps, natural rubber , tires, footwear, processed marbles, toys, plastics, aluminum and copper scrap, medical devices, television images, automobiles and automobile components, and sectors under the production-related incentive regime.
It is a global agreement. It covers goods, services, rules of origin, SPS (sanitary and phytosanitary) measures, TBT (technical barriers to trade), dispute settlement and trade facilitation.
”These are standard parts of an FTA, but we are now in a new era of FTAs. This is the first time we enter digital trade, government procurement, IPRs (intellectual property rights).
”These are the areas where India has traditionally been hesitant to engage with multilateral or bilateral relations. I think (now) it shows the maturity and confidence that we’re moving forward and signing (agreements with these chapters),’ he said.
These chapters, he said, may be small, but they set the course, the trend and the tone, and they reflect India’s desire to be a major global player in many areas, a he declared.
The Comprehensive Free Trade Agreement signed between India and the UAE will help bilateral trade to reach the $100 billion mark in over five years and create around 10 lakh jobs in sectors such as clothing, plastics, leather and the pharmaceutical industry.
Under the pact, the UAE opens the market to 90% of Indian products at zero duty and in five years it will reach 99%. Similarly, India would grant duty-free market access to 80% of its exports and in ten years this rate would rise to 90%.
(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)