India’s silver imports from UAE on the rise

Reuters/Amit Dave

• UAE provides 40% of India’s silver
• Cepa means lower duty is paid
• UAE refines rather than mines

Supplies of silver to India from the UAE have increased this year, as the Emirates’ exporters benefit from an agreement signed between the countries two years ago.

The India-UAE comprehensive economic partnership agreement signed in 2022 has significantly boosted imports, according to a report by Indian English-language business newspaper The Financial Express. 

The UAE route accounted for 1,542 tonnes – more than 40 percent – of silver imports into India in the first three months of 2024. This is largely a result of the duty difference. 

Silver imports via other routes are subject to a 15 percent duty, but those under the Cepa route pay an 8 percent duty. 

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This growth in silver imports coincides with a substantial increase in global silver trade. 

According to Metal Focus, a UK-based metal research consultancy, India imported 3,730 tonnes of silver in the first quarter of 2024. This surpasses the total imports of 3,475 tonnes recorded in 2023 and will beat the record high of 9,450 tonnes in 2022 if maintained throughout the year.

“The duty differential on imports from UAE will continue to widen with 1 percent reduction every year,” according to the World Silver Survey 2024.

“In the absence of any policy change or a reduction in India silver import duties for the rest of the world, the UAE is expected to remain the biggest supplier of silver to India in the coming years.”

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However, the survey highlighted certain prerequisites that must be met. Indian silver importers using this route must provide a Certificate of Origin to prove that the silver has been refined in the UAE and undergone a 3 percent value addition. 

Since the UAE lacks silver mining operations, local refineries convert bars into grains to meet the 3 percent value addition requirement. Bullion traders purchase the imported silver in grain form.

The cost of silver in India is determined by international prices. It also depends on currency movement of the rupee against the dollar, said Indian mutual funds platform Goodreturns.

“If the rupee falls against the dollar and international prices remain stable, silver will become more expensive”.

According to Reuters, spot silver fell about 1 percent to $26.92 per ounce on Tuesday. 

Earlier this year, Indian prime minister Narendra Modi and UAE president Mohammed bin Zayed Al Nahyan signed a bilateral investment treaty. 

The UAE is India’s third-largest source of foreign direct investment and the seventh-largest trade partner.