Important provisions related to G&J Industry – CEPA between India and UAE effective from 1-5-2022
This article highlights the key provisions of Comprehenstive Economic Partnership Agreement (CEPA) executed between India and UAE as applicable to Gems & Jewellery Industry effective from 1st May, 2022:
Source: https://commerce.gov.in/international-trade/trade-agreements/comprehensive-economic-partnership-agreement-between-the-government-of-the-republic-of-india-and-the-government-of-the-united-arab-emirates-uae/
REVISED CUSTOM DUTY RATE APPLICABLE FOR IMPORT OF GOODS FROM UAE TO INDIA:
Subject to other conditions as prescribed in CEPA, the revised rates of custom duty applicable on import of gold/ jewellery/ diamonds from UAE as applicable from 1-5-2022 shall be as below
| HSN | Product Description |
Current Duty Rate (%) |
Revised Duty Rate (%) | Remark |
| 71023910 | Diamond (other than industrial diamond), cut or otherwise worked but not mounted or set | 7.5 | 7 – 0% | As part of tarrif phased elimination (TEP), duty rate will be reduced by 0.5% every year so as to be reduced to 0% by 10th year |
| 71131910 | Articles of jewellery of gold, unstudded | 20 | 19 – 15% | As part of Tariff Reduction (TR), duty will get reduced by 1% every year up to first 5 years and thereafter it will remain @15% up to 10 years. Duty reduction has been linked to Tarrif Rate Quota (TRQ). TRQ limit will be 2100 kg. for the first year. The same shall increase by 100 kg. every year up to 2500 kg in 5th year |
| 71131920 | Articles of jewellery of gold, set with pearls | 20 | 19 – 15% | As above |
| 71131930 | Articles of jewellery of gold set with diamonds | 20 | 19 – 15% | As above |
| 71131940 | Articles of jewllery of gold, set with other precious and semiprecious stones | 20 | 19 – 15% | As above |
| 71131950 | Articles of jewllery of platinum, unstudded | 20 | 0 | |
| 7108 | Gold | 10 | 9% | Reduction in absolute duty by 1%. TRQ limit will be 120 tonnes for the first year. The same shall increase by 20 tonne every year up to 200 tonnes in 5th year |
| 71042100 | Synthetic or reconstructed precious or semi-precious stones whether or not worked or graded but not string, mounted or set | 10 | 0% | Tariff eliminated with effect from 1st year itself (earshtwhile HSN 71042090 and 71042010) |
| 71049100 | Ungraded synthetic or reconstructed precious or semi-precious stones temporarily strung for convenience of transport | 10 | 0% | Tariff eliminated with effect from 1st year itself (earstwhile HSN 71049010) |
REVISED CUSTOM DUTY RATE APPLICABLE FOR IMPORT OF GOODS FROM INDIA TO UAE:
| HSN | Product Description |
Current Duty Rate (%) |
Revised Duty Rate (%) | Remark |
| 71090000 | Base metal or silver, clad with gold not further worked than semi-manufactured | 5 | 0% | Duty reduced to zero with immediate from year 1 |
| 71110000 | Base metal, silver or gold clad with platinum not further worked than semi-manufactured | 5 | 0% | As above |
| 71051000 | Dust and powder of natural or synthetic precious or semi-precious stones of Diamonds | 5 | 0% | As above |
Chapter 3 of CEPA stipulates further conditions to avail the benefits of reduced/zero duty rate. It requires that output product should result into change in sub-heading from other sub-heading of HS code (referred as “CTSH”) AND there should be minimum value addition (referred as “VA”) as prescribed. Value addition to be calculated based on following formulae
Cost of originating material + Direct Labour cost + Direct Overhead Cost/ FOB Value
Product specific minimum value addition to be acheived has been listed below under Product Specific Rule (PSR)
| HS Code | Descreption of the Product | Product Specific Rule (PSR) |
| Chapter 71 | Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin | CTSH + VA 40% |
| 7102 | Diamonds | CTSH + VA 6% |
| 710812 | Other unwrought forms of gold | Certified UAE/ lndia good delivery gold bars in different denomination |
| 711319 | Jewellery of gold unset | CTSH + 3.5% VA |
| 711319 | Jewellery of gold set with pearls | CTSH + 6% VA |
| 711319 | Jewellery of gold set with diamonds | CTSH + 7% VA |
| 711319 | Jewellery of gold set with precious and semi- precious stones other than diamonds | CTS |
Limitation: The purpose of this article is for knowledge sharing purpose. Views expressed in this note are personal views of the author. The same should not be construed as professional advise