UAE’s Role in India’s Gold Trade Raises FTA Concerns

The first quarter of 2026 saw India’s real GDP surge to 7.8%, propelled by a 9.2% rise in manufacturing and vigorous services activity. While the macro‑data painted a positive picture, gold imports painted a more troubling scene.

Gold inflows jumped 47.1% year‑on‑year, lifting the import bill to USD 11 billion for April‑June 2026. Despite a duty increase from 6% to 15% in mid‑May, imports kept climbing, a trend largely linked to the United Arab Emirates. In June alone, gold purchases from the UAE rose 175.2% to USD 649.4 million, expanding the Emirates’ share of total monthly imports from 12.8% to 33%.

Over the three‑month span, UAE‑origin gold more than doubled, climbing 124.8% from USD 1.40 billion to USD 3.14 billion. The surge contributed USD 1.74 billion to the overall rise of USD 3.53 billion in India’s gold imports.

The pattern has put the India‑UAE Free Trade Agreement under the spotlight. Under the pact, gold that satisfies the rules of origin can enter India at a reduced 14% tariff compared with the standard 15% rate. Critics argue that this narrow advantage may be prompting traders to route bullion through Dubai, potentially distorting trade flows and undermining tariff policy.