The sinking value of the rupee and increased import duties on gold are giving UAE precious metals traders a shot in the arm.
India has been making it harder and harder to buy gold in the country for much of the last year in a failing attempt to rein in a record trade deficit.
The government's biggest weapon in this fight has been the steady increase of import duty on gold with the latest effort two weeks ago imposing a record 10 per cent tax on imports of the yellow metal.
The effort is largely failing, however, and the Indian economy is in trouble.
The rupee is in freefall. The currency closed at 64.3 to the US dollar yesterday, down 1.7 per cent from its close on Friday. It fell to a record low of 65.56 last week, and has lost 14.5 per cent so far this year.
Foreign investment funds, meanwhile, are dumping Indian stocks and bonds, further compounding the current account problems.
In such an environment, and with the gold price still relatively low at about US$1,400 a troy ounce compared with more than $1,900 at its peak in 2011, investors across the subcontinent are turning back to precious metals as they seek a safe haven in the storm.
Exchange-traded funds focused on gold are gaining in popularity in India, as they are across much of the developing world, as a means of investing in gold inside the country without having to bear the brunt of increased import duty and therefore higher prices.
But the trade in bullion and coins is still a key one to Indian investors who are looking to traders and firms in the UAE to help them to avoid the punishing taxes that result in a physical gold price within India that is 10 per cent higher than in the rest of the world.
"The UAE is an important trading centre for Indian gold investors," said Jeffrey Rhodes, the managing director of the Dubai-based Kaloti Gold's new financial instruments division. Kaloti Gold is one of the world's biggest gold refining and trading companies.
"With this continued increase in import duty this year more and more Indian traders are setting up shop here and more and more investors are buying and selling," Mr Rhodes said.
"They don't need to import the gold into India and they feel very comfortable with the infrastructure here. It's a win win."
Gold is the second largest import in India after oil and is an essential element of the Indian psyche, Mr Rhodes added.
"Trying to stop Indians buying gold is like King Canute trying to turn back the tide. It isn't going to happen, which is why we are seeing increases in trade here from Indian clients."
The price of gold on the Comex exchange in New York yesterday morning was unchanged at $1,395.5 a troy ounce.