By Paul Ploumis 22 Jun 2015 Last updated at 08:42:35 GMT
NEW DELHI (Scrap Monster): The Indian Finance Ministry and Commerce Ministry has initiated steps to keep gold jewellery out of all Free Trade Agreements (FTAs) that are to be signed in future. Moreover, re-negotiations will be held with respective countries to remove gold jewellery from the existing FTAs. The move follows the observation made by the All India Gems and Jewellery Trade Federation (GJF) that the increased imports of gold jewellery from Thailand and other Association of Southeast Asian Nations (ASEAN) countries have damaged domestic gold jewellery making business in the country.
According to India-Thailand FTA, the exporters are required to pay only 1% duty on imports of gold jewellery imported from Indonesia. On the other hand, gold jewellery imports from other countries attract a duty of 10%. The low import duty has flooded the domestic market with imported gold jewellery from Indonesia.
The Commerce Ministry noted that the country’s gold imports surged higher by 19.5% to $34.32 billion in 2014-’15. It noted that gold jewellery imports from Thailand had violated rules of origin. Also, value addition norms were not met. India has already written to Indonesian authorities stating that it suspects violation of rules of origin in jewellery imported from that country.
The cheaper imports from Indonesia have hampered the domestic gold jewellers in the country, noted Manish Jain, Chairman, GJF. Import of raw gold normally attracts 10% duty. Along with cess and VAT, the total duties could go up to 12-13%. Considering 4% making costs, gold jewellery made in India turns out to be much expensive than those imported from Indonesia.
The Commerce Ministry confirmed that it will ensure that its view on international gold jewellery trade will be highlighted during the ongoing negotiations with regards to various trade pacts including the Regional Comprehensive Economic Partnership (RCEP). It further assured that the government will do the needful to protect the domestic gold jewellery sector in the country which employs nearly 40 lakh skilled artisans.