Silver imports no scam, say experts countering opposition claims

Some of the opposition leaders in India, including Prashant Bhushan, Jairam Ramesh, and Saket Gokhale, have been cited by a BusinessWorld report as accusing the government of "major scam" facilitation through silver imports via Gujarat International Finance Tec-City.

However, experts believe those allegations are devoid of any merit.

The accusations have come forth in light of the sudden increase in silver imports from Dubai routed through GIFT City.

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This surge in imports has come at a time when the India-UAE Comprehensive Economic Partnership Agreement came into force in May 2022, providing a preferential customs duty of 8 per cent on silver imports from the UAE, against the 15 per cent duty levied on imports from other countries like China.

This shift in import sources has been attributed to a deliberate attempt by the Indian government to reduce dependence on China, with whom India has strained political relations.

It is for this reason that China has supplied much silver before 2023 to India.

From the recent budget of 2023, the government increased the customs duty on silver imports from China to 15 per cent, which greatly saw the imports from that country drop significantly.

Opposition leaders base those scam allegations on a GTRI report titled "FTA Led Spike in Gold and Silver Imports from UAE."

Noting that there may be possibilities of "tariff arbitrage" by which a few importers could make undue gains by taking advantage of the difference in duty, the GTRI report is stressed.

However, experts counter that this report fails to consider the overall geopolitical perspective and the gainful provisions CEPA granted.

It is the highlight of the experts that it is not one-way traffic.

India has also gotten concessions on its exports to the UAE, which include jewellery that attracts a 5 per cent waiver on import duty.

This is a bilateral trade agreement, an opportunity for Indian manufacturers to take on China in the global market.

Further, experts highlight that the GTRI report does not account for the loss in revenue India would have incurred by continuing to rely on China for silver imports.

They believe the report is one-sided and the research methodology or skills of the people who put together it were never made transparent.

While the surge in silver imports through GIFT City raised an eyebrow, experts believe there was no reason to fear.

This only reflects more of a strategic move by the Indian government, which tends to decrease dependence on China and boost India's trading competitiveness.