In a report, GTRI backed Modi’s call for restraint in gold buying, saying surging bullion imports are putting pressure on India’s foreign exchange reserves and widening the trade imbalance. But the think tank also argued that consumer demand alone does not explain the sharp rise in imports, pointing instead to tariff concessions offered under the India–UAE trade pact.
On May 10, Modi urged citizens to postpone “non-essential” gold purchases, including jewellery buying for weddings, amid global economic uncertainty. India imports nearly all the gold it consumes, making bullion one of the country’s biggest import burdens.
According to the report, India’s gold bar imports rose sharply from $36.5 billion in 2022 to $58.9 billion in 2025.
At the same time, imports routed through the United Arab Emirates have surged disproportionately since the India–UAE Comprehensive Economic Partnership Agreement (CEPA) came into effect in May 2022.
GTRI said the trend is raising concerns because “the UAE neither mines gold nor carries out major processing activity”, despite emerging as one of India’s largest sources of bullion imports in just a few years.
The report said much of the trade “appears to involve routing gold from third countries through Dubai simply to benefit from lower Indian tariffs”, suggesting that Dubai may increasingly be functioning as a trading gateway rather than the actual source of the gold entering India.How the India-UAE trade deal changed gold flows
Under the CEPA agreement, India allowed gold imports from the UAE at tariffs one percentage point lower than standard import duties through a Tariff Rate Quota (TRQ) mechanism.
The quota initially covered 120 tonnes annually and is set to rise to 200 tonnes from 2027, accounting for nearly a quarter of India’s gold imports.
The tariff advantage became significantly more valuable after India cut the standard gold import duty from 15% to 6% in the 2024 Union Budget. As a result, gold imported through Dubai effectively entered India at a 5% duty rate.
India also allowed private firms and jewellers to directly import bullion through the India International Bullion Exchange in GIFT City, further easing the flow of imports.
GTRI said these policy changes substantially altered sourcing patterns for gold imports into India.
UAE’s share in India’s gold imports jumps fourfold
India’s gold bar imports from the UAE rose from $2.9 billion in 2022 — before the trade agreement took effect — to $6.7 billion in 2023 and then climbed sharply to $16.5 billion in 2025.
Dubai’s share in India’s total gold imports increased from 7.9% before the FTA to 28% in 2025, according to the report.
The think tank said the pace of growth appears difficult to reconcile with the UAE’s limited domestic gold production or refining capacity, intensifying concerns over whether third-country gold is increasingly being routed through Dubai to exploit tariff advantages under the trade pact.
GTRI warns of possible misuse of Rules of Origin
The report also warned of possible misuse of Rules of Origin provisions under the FTA framework.
Rules of Origin determine whether a product genuinely qualifies for tariff concessions under a trade agreement. GTRI cautioned that “artificial processing” or minimal value addition may be used to classify third-country gold as UAE-origin shipments eligible for lower duties in India.
The think tank urged the government to tighten origin verification norms and review precious metal concessions granted under existing FTAs.
It also recommended excluding gold, silver, platinum and diamonds from future trade agreements to prevent tariff arbitrage and reduce pressure on India’s trade balance and foreign exchange reserves.
According to GTRI, while Modi’s appeal focuses on reducing demand-side pressure, trade policy loopholes linked to bullion imports may also require closer scrutiny if India wants to curb its growing gold import bill.