By Paul Ploumis 05 Aug 2015 Last updated at 08:31:18 GMT
NEW DELHI (Scrap Monster): The Indian government has decided to impose strict restrictions on gold jewellery imports from ASEAN countries under the existing Free Trade Agreement (FTA).
According to the government, the imports under FTA have risen sharply during recent times. Gold jewellery originating from countries other than ASEAN countries are suspected to be finding its way into India as part of FTA trade. In an effort to curb such imports, the government has asked gold importers to furnish a bank guarantee equivalent to the duty benefits until the country-of-origin certificate is verified. The government has all rights to claim the bank guarantee, if the benefit is wrongly claimed. Additionally, proof for value addition must be provided for imports from third country.
In accordance with the FTA signed in 2009, the gold jewellery imports from the 10-nation bloc are subject to 2% import duty, as against the higher duty of 10% being charged for trade through normal channel. The FTA rules also specify 35% value addition by ASEAN member country before exporting a third-country product to India.
Recently, the country’s Directorate of Revenue Intelligence (DRI) had warned the government on surging gold jewellery imports through FTA route. DRI had raised suspicions that a good majority of this jewellery was being manufactured in third countries but routed through ASEAN countries to avail the benefit of lower import duty. The authorities had revealed several cases where gold jewellery from Dubai was routed through Indonesia.
The gold jewellery imports from Indonesia have surged significantly during recent months. Trade sources indicate that importers melt the imported gold jewellery and sell it as raw gold. Also, domestic jewellers tend to melt the jewellery imported from Indonesia and make new products out of it as it is found more profitable than making jewellery out of imported raw gold.