India’s gold imports are increasingly being sourced through the United Arab Emirates, with UAE shipments rising sharply even as imports from other major markets have weakened. The shift has drawn attention to the preferential tariff treatment available to UAE-origin gold under the India-UAE Comprehensive Economic Partnership Agreement (CEPA).
India’s gold imports rose 47% during April-June, with the UAE accounting for nearly half of the overall increase. In contrast, gold shipments from the rest of the world declined during the quarter, highlighting a significant change in India’s sourcing pattern.
The UAE’s growing role has been particularly notable since the India-UAE CEPA came into effect in May 2022. Under the agreement, eligible gold imports from the UAE receive a one-percentage-point tariff advantage compared with the standard import duty, subject to a tariff-rate quota. The preferential treatment has made UAE-sourced bullion more competitive for Indian buyers.
Gold imports from the UAE have increased substantially since the trade pact was implemented. Data cited in May showed that imports of gold bars from the UAE rose from around $2.9 billion in 2022 to $16.5 billion in 2025, while Dubai’s share of India’s gold imports climbed from 7.9% before the agreement to 28% in 2025.
Trade diversion concerns
The sharp increase in UAE shipments has prompted concerns over whether the tariff concession is encouraging trade diversion, with gold potentially being routed through the UAE because of the preferential duty rather than because of a fundamental change in production or supply patterns.
The Global Trade Research Initiative (GTRI) has highlighted the possibility that the tariff differential is influencing India’s gold sourcing decisions. The development has placed greater focus on the effectiveness of preferential trade agreements and whether their benefits are translating into genuine economic gains.
India’s overall gold import bill has also been elevated by high international prices. In FY2025-26, the country’s gold import bill reached about $72 billion, even though the physical volume of imports was lower, reflecting the sharp rise in gold prices.
Demand remains strong
Strong domestic investment demand has contributed to the rise in gold imports. The World Gold Council reported that India imported 186 tonnes of gold in the first quarter of 2026, up 58% year-on-year, with investment demand providing significant support.
However, geopolitical disruptions in the Middle East have periodically affected gold shipments from the UAE, which is an important supply route for India. Such disruptions demonstrate the risks associated with increasing reliance on a single regional trading hub.
The UAE’s expanding role in India’s gold supply chain therefore reflects a combination of preferential trade terms, Dubai’s position as a global bullion hub and strong Indian demand. At the same time, the growing concentration of imports through the UAE is likely to keep the India-UAE trade agreement under scrutiny as policymakers assess its impact on India’s import bill, trade deficit and domestic gold market.