By Courtney Trenwith
India has lost its position as the UAE’s top trading partner after hiking gold import tax by five times
Trade between the UAE and India plummeted 21 percent during the 2013-14 financial year after India increased its gold import tax by five times, according to a report by HSBC.
Bilateral trade between the countries had reached a record $75.4 billion during 2012-13 but dropped to $59.6 billion a year later, mainly due a $9bn decline in gold exported from the UAE to India.
The Indian government hiked the duty on gold bullion imports three times last year from 2 percent to a record 10 percent, in a bid to raise money to help curb a bulging current account deficit.
The import duty on gold jewellery also was increased to 15 percent.
Dubai’s gold industry was one of the worst affected by the decision.
However, Indian exports to the UAE also fell 16 percent to $30.49 billion from $36.3 billion, while total imports from the UAE plummeted 25 percent to $29 billion from $39 billion.
The decreased trade saw India lose its position as the UAE’s top trading partner, which it had held for the several years previous.
China took over, with $65.8 billion worth of trade, followed by the US ($61.4 billion).
However, the HSBC Trade Forecast report said India would soon return to the top.
Other fast growing trading partners would be China, Turkey and Vietnam, the bank said.
“The UAE is likely to remain top export destination for India till 2030, and China is forecast to emerge as the second largest export market, displacing the US,” the report says.