By Anil Mathews (ScrapMonster Author)
December 07, 2015 07:02:32 AM
NEW DELHI (Scrap Monster): The Indian government is planning to ban imports of 24-carat gold jewellery. The government may amend the existing rules to allow imports of only lower-quality 18-carat and 22-carat gold jewellery. The move is considered as an attempt to control the misuse of free trade agreements (FTAs) with Asian countries.
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 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. Recent investigations by the Directorate of Revenue intelligence (DRI) officials had revealed that gold jewellery being manufactured in third countries are routed through ASEAN countries to avail the benefit of lower import duty.
The FTA rules also specify 35% value addition by ASEAN member country before exporting a third-country product to India. However, a good majority of the imported gold jewellery is melted to make coins and bars which are then sold in the local gold market in the country.
According to recent data published by the Gems and Jewellery Export Promotion Council (GJEPC), the country’s gold jewellery imports in Oct ’15 amounted to Rs 196.68 crores ($30.23 Million), significantly lesser when compared with the imports valued at Rs 247.88 crores ($40.41 Million) a year before. The cumulative imports during the initial seven months of the fiscal totaled Rs 1,217.73 crores ($189.20 Million).
Meantime, Finance Ministry officials have declined to comment on the proposed change in import rules.