New Delhi, Nov 4 (PTI) The Congress on Monday alleged that the India-UAE Economic Partnership Agreement (EPA) signed by the Modi government is “fraught with irregularities” and said several questions emerge on its negotiation and implementation.
Congress general secretary-in-charge communications Jairam Ramesh cited a media report to buttress his allegations.
There was no immediate reaction from the government on the allegation.
“The India-UAE Economic Partnership Agreement (EPA) signed by the non-biological PM’s Government is fraught with irregularities,” Ramesh said in a post on X.
The treaty has a loophole that stipulates that any alloy with more than 2 per cent platinum by weight will incur import duty on platinum alloy, he said.
“India has imported a whopping Rs 24,000 crore worth of platinum alloy since the treaty was signed in May 2022 – internal records of tax authorities estimate that more than 90 per cent of this is actually gold. Until July 2024, import duty on platinum alloy stood at 8.15% as against the effective tax of 18.45 per cent on gold,” Ramesh said.
India is estimated to have lost at least Rs 1,700 crore in revenue due to the treaty-mandated classification of this alloy as platinum rather than gold, he said.
In addition to the financial loss incurred, this loophole has made a mockery of India’s regulatory infrastructure, the Congress leader alleged.
“The Finance Minister’s lowering of the duty on gold in her budget speech in July 2024 was partly to close this loophole. In other words, rather than negotiating a treaty to ensure compliance with the Government’s economic policy, the Government adjusted its policy to try to plug loopholes in the treaty,” Ramesh claimed.
Private traders are banned from importing gold except for some exceptions via GIFT City, but have been able to use this EPA-given loophole to circumvent regulation, he said.
“The UAE itself is not a significant miner of gold but imports the metal from Africa. As long as the value added in the UAE is 3% of the value of the product, the gold or platinum is covered by the India-UAE EPA. It is possible that our entire gold import regulation mechanism is being undermined by the routing of gold imports via UAE,” he said.
Ramesh said this is not the only alarming report coming in from the India-UAE EPA as since June this year, “We have also been hearing of a most suspicious story playing out in silver imports from the UAE”.
India’s silver imports from UAE stood at USD 2.2 million during Jan-April 2023 and jumped gigantically to USD 1.44 billion in Jan-April 2024, he said, adding that this is a 647x jump in one year.
“UAE overnight became India’s largest source of silver imports (45 per cent of total), even as silver imports grew 10x in this time period,” Ramesh said.
He said the UAE does not mine much silver either and it imports silver bars and converts them into silver grains – a process which generally witnesses only 1 per cent value add and should therefore be exempt from the EPA which requires a 3 per cent value add.
The surging silver imports however suggest that the government has failed to ensure adequate regulation of this treaty’s enforcement by the UAE, Ramesh said.
“Since the EPA came into force, GIFT City has monopolized India’s silver imports. The GIFT City exchange registers private traders and sees less regulation than the general import architecture for gold and silver in the rest of the country. The circumvention of the 3 per cent value add clause may therefore be routed through GIFT City in particular,” he said.
Ramesh claimed several questions now emerge on the negotiation and implementation of the EPA.
“The commerce minister led much of the negotiation for the trade deal and wrapped up the agreement in a ‘record span’ of 88 days. Did this undue haste in finalising such an important agreement result in the creation of these loopholes?” he said.
“Reports — including one by the Global Trade Research Initiative — had warned the government of the havoc the India-UAE EPA could wreak on India’s gold, silver, and platinum industries. Did the Government intentionally neglect such concerns to push through this deal?” he said.
Is GIFT City exempt from government regulation and scrutiny, Ramesh asked.
“What is the role of GIFT City traders in enabling the mass imports of silver and tariff-skipping ‘platinum alloy’ from the UAE? Are these players being afforded special protection?” he said. PTI ASK RHL
This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.