A GJEPC webinar on how to avail benefits of India-UAE Comprehensive Economic Partnership Agreement (CEPA) was attended by 160 members in late March.
The objective of GJEPC’s virtual discussion on 29th March was to provide comprehensive information about the Indo-UAE CEPA, especially its benefits for increasing gem and jewellery trade between the two countries.
The keynote speakers were A. Bipin Menon (ITS), Development Commissioner, Noida, Special Economic Zone (one of the key members of the team who negotiated the Agreement with UAE) and Abdulla Albasha Alnoaimi, Commercial Attache (Counsellor), Embassy of the United Arab Emirates. The session was also addressed by K.K. Duggal, Director, Policy, GJEPC; Rashmi Arora, Economist, GJEPC; and Ashok Seth, Regional Chairman (North), GJEPC, who delivered the vote of thanks.
Alnoaimi said, “India and UAE took their partnership to a whole new different level with the signing of the CEPA agreement on 18th February 2022. The agreement would unleash a golden era in the bilateral relationship by boosting investments, trade, technological partnerships and creating employment opportunities across sectors. The agreement was finalised in a record time of 88 days. India-UAE CEPA would help in setting economic priorities for the post-pandemic era and help in boosting the merchandise trade between the two countries to $100 billion over the next five years. Gems and jewellery sector has been given special emphasis in the CEPA.”
Watch the entire webinar below:
Some of the key features of the agreement include:
- Reduction in import duty on finished jewellery products exported to UAE from India from 5 to 0%.
- Allowance of import into India from UAE up to 120 tonnes of gold at 1% duty less than the applicable duty in the first year, which will increase to 200 tonnes in 5 years.
The speakers noted that this will provide raw material import at competitive prices in India and provide free access for finished products to the UAE market. The CEPA is effective 1st May, 2022 and would provide Indian jewellers new business opportunities, competitive advantage, and unparalleled access to the Middle Eastern, European, and African markets.
Bipin Menon explained the salient features of the India-UAE CEPA in terms of duty benefits/relaxations by UAE for Indian exporters.
India-UAE CEPA is one of the most comprehensive FTAs as the agreement total offer includes tariff elimination in phased (5/7 years) and in phased (10 years). The tariff reduction/quota is at 90.28% from the Indian side and 97.6% from UAE side.
India has allowed tariff elimination on around 65% of tariff lines while UAE has allowed tariff elimination on 80.3% of tariff lines reflecting tariff asymmetry of both countries.
Rules of origin
The India-UAE CEPA’s rules of origin are stringent to ensure that substantial processing occurs in both countries so that there is limited opportunity for re-exports entering from 3rd party countries. Some of the key features pertaining to the rules of origin in the India-UAE CEPA are as follows:
- The usual list of wholly obtained or produced goods is used
- PSR norms – Wholly obtained, Chance in tariff Classification (CTC) plus value addition or process-based norms are used in the CEPA agreement
- Value addition – Profit element excluded from build-up method
- Minimal operations – Comprehensive
- De minimis – 1 % for Wholly obtained category as well
- Only 3rd party certification – Certificate of origin is issued by 17-18 agencies in India while for UAE COO is used by Ministry of Economy.
- Exporters to maintain ‘minimum information requirements’ which include profits
- Timeline-based information/documentary exchange between competent authorities for verification
Value addition norms
The two major value addition methods are incorporated in the agreement namely: a) Build-up method and b) Build-down method
- Build-up Method: (Cost of Originating Material + Direct Labour Cost + Direct Overhead Cost) / (FOB Value or Ex Works Price).
- Build-down Method: (FOB value or Ex Works Price) – (Value of Non-originating Material) / (FOB value of Ex-works price).
Tariff concessions for Indian gems and jewellery products in UAE
UAE has offered a wide variety of tariff concessions on key gem and jewellery commodities with a certain value addition norms. The tariff rate on all gem and jewellery commodities has been reduced from 5% to nil with value addition ranging from CTSH 3% to 40%. These value addition norms will be applicable only on non-originating countries barring India and UAE. Some of the tariff concessions and value addition norms are:
Tariff Elimination on Imports of G&J Commodities in UAE from India and ROO
| Commodity | Present Duty | FTA Duty | Rules of Origin |
| Pearls | 5% | NIL | CTSH + 40% |
| Unsorted diamond | 5% | NIL | CTSH + 6% |
| Cut and Polished Diamond | 5% | NIL | CTSH + 6% |
| Rough coloured gemstones | 5% | NIL | CTSH + 40% |
| Polished coloured gemstones | 5% | NIL | CTSH + 40% |
| Rough /Polished LGD | 5% | NIL | CTSH + 40% |
| Silver Jewellery | 5% | NIL | CTSH + 3.5/6% |
| Gold Jewellery | 5% | NIL | CTSH + 3.5/6/7% |
| Platinum Jewellery | 5% | NIL | CTSH + 3.5% |
| Imitation Jewellery | 5% | NIL | CTSH + 40% |
Source: Annexure 2B Schedule of Specific Tariff commitments of UAE on Trade in goods, UAE CEPA -Chapter 2, MOC&I
Rashmi Arora presented the tariff relaxations by India for UAE for all products in the gem and jewellery sector, the importance of tariff concessions by both countries, and other facets of the agreement. The India-UAE CEPA is an economic deal which is based on give-and-take relationships wherein reduction or removal of duty restrictions from both countries are required. The agreement has to create a balance between benefits of UAE exporters, impact on the Indian domestic gem and jewellery industry and some or no benefit to Indian importers. The CEPA negotiations have included extensive data analysis, trade consultations, and multiple rounds of discussions with the government. Some of the concessions offered by India include:
Tariff Elimination on Imports of G&J Commodities in India
| Description | Standard Rate (%) | Effective Rate (%) | Tariff Modality Offered | Schedule of Tariff Rate Concessions (%) | Value addition norms | |||||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | |||||
| Cut & Polished diamonds | 10 | 7.5 | Tariff elimination phased over 10 years | 7 | 6.5 | 6 | 5.5 | 5 | 4 | 3 | 2 | 1 | 0 | CTSH + 6% VA |
| Rough coloured gemstones | 10 | 0.5 | Tariff elimination immediate | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | CTSH + 40% VA |
| Polished coloured gemstones | 10 | 7.5 | Tariff elimination phased over 10 years | 7 | 6.5 | 6 | 5.5 | 5 | 4 | 3 | 2 | 1 | 0 | CTSH + 40% VA |
| Silver bar unwrought (710691 & 710692) | 12.5 | 10 | Tariff elimination phased over 10 years | 9.5 | 9 | 8 | 7 | 6 | 5 | 4 | 3 | 2 | 0 | CTSH + 3% VA |
| Gold bar unwrought (710812) | 12.5 | 10 | TR (Tariff concession/relief of 1% in absolute percentage terms, Tariff rate quota of 200 tons phased in 5 years) | 1% absolute duty reduction over the applied rate (TARIFF RATE QUOTA of 120 tonnes) | 1% absolute duty reduction over the applied rate (Tariff rate quota of 140 tonnes) | 1% absolute duty reduction over the applied rate (TARIFF RATE QUOTA of 160 tonnes) | 1% absolute duty reduction over the applied rate (TARIFF RATE QUOTA of 180 tonnes) | 1% absolute duty reduction over the applied rate (TARIFF RATE QUOTA of 200 tonnes) | 1% absolute duty reduction over the applied rate (TARIFF RATE QUOTA of 200 tonnes) | 1% absolute duty reduction over the applied rate (TARIFF RATE QUOTA of 200 tonnes) | 1% absolute duty reduction over the applied rate (TARIFF RATE QUOTA of 200 tonnes) | 1% absolute duty reduction over the applied rate (TARIFF RATE QUOTA of 200 tonnes) | 1% absolute duty reduction over the applied rate (TARIFF RATE QUOTA of 200 tonnes) | Certified UAE/ lndia good delivery gold bars in different denomination |
| Platinum bars unwrought (711011& 711019) | 12.5 | 10 | Tariff elimination phased over 5 years | 9.5 | 7.5 | 5 | 2.5 | 0 | 0 | 0 | 0 | 0 | 0 | CTSH + 3% VA |
| Gold jewellery | 20 | 20 | TR (Tariff rate quota of 2.5 tonnes) | 19(Tariff rate quota of 2100 kg) | 18 (Tariff rate quote of 2200 kg) | 17(Tariff rate quota of 2300 kg) | 16(Tariff rate quota of 2400 kg) | 15(Tariff rate quota of 2500 kg) | 15(Tariff rate quota of 2500 kg) | 15(Tariff rate quota of 2500 kg) | 15(Tariff rate quota of 2500 kg) | 15(Tariff rate quota of 2500 kg) | 15(Tariff rate quota of 2500 kg) | CTSH + 3.5/6/7% VA |
Source: Annexure 2A Schedule of Specific Tariff commitments of India on Trade in goods, UAE CEPA -Chapter 2, MOC&I
The panellists then addressed the queries and doubts of the participants pertaining to:
- CTSH definition
- Duty on jewellery with precious stones in CEPA
- Determination of rules of origin norms for rough gem and jewellery products
- Duty on gold bars
The comprehensive features of the India-UAE CEPA can also be viewed by clicking here