India’s Directorate General of Foreign Trade is inviting bids for the first 30-tonne tranche of the gold import quota at 1% custom duty under the India-UAE CEPA, according to a government order. It is the first major test of a competitive bidding process introduced in October, which replaced the earlier discretionary allocation.

Why now? The move to a tender process suggests the government is wary of a surge in UAE gold imports and is using price discovery (via the bid) to manage the flow rather than implementing arbitrary caps.

The tender process aims to improve transparency regarding tariff concessions for traders along the UAE-India trade corridor. Successful bidders gain access to a 1% duty concession, a significant margin advantage in a high-volume, low-margin commodity trade.

India’s gold imports from the UAE surged sharply after the India-UAE CEPA, from about USD 3 bn in FY 2023 to around USD 7.6 bn in FY 2024, reflecting a 148% y-o-y increase, according to Hindu Businessline.

A compliance filter: By auctioning the quota, the government captures more of the trade’s value while ensuring that the benefits are tied to domestic regulatory compliance. The government is effectively cleaning up the trade channel to ensure only formalized players benefit from the CEPA’s preferential rates.

Who stands to benefit? For UAE-based refineries, this means the tier-one Indian clients, those with the scale and compliance to win these bids, will become even more dominant in the trade corridor.

Tags: