Gold Imports By Private Players May Face Curbs
Sun July 21 2024
Government is likely to include the import of India's favourite yellow metal gold in the restrictive category item list. Currently, leading banks are allowed to import gold from overseas and have been allocated quotas for the same. But there is no restriction on private players like (qualified) jewellers on import of gold. Once the government includes gold in the list of restrictive items, any private player who wants to import it, will first have to apply for a license with the Director General of Foreign Trade (DGFT).
Even after getting a gold import license, private players will face curbs in terms of allocated quotas, the sources said. Also, proper justification will be required for the quota demanded by the private players and checks on fraudulent imports can lead to blacklisting and fines. Once Gold is included in the restrictive list, any quantity however small will require a license.
The new gold import curbs could either be announced by the Finance Minister in her Budget on Tuesday or a notification with regard to gold import curbs will be issued by the DGFT in the coming days.
The sources say that the current open system of gold imports was alleged to be being abused by the bullion traders and dealers in India, who were importing the yellow metal with platinum coating over it. As per India-UAE Comprehensive Economic Partnership Agreement (CEPA), any metal with just 2 percent platinum being imported from the UAE attracts only 5 percent customs duty in India while the same on gold is 15 percent. Using this loophole, private bullion players are importing gold masked as platinum and benefiting from the near 10 percent duty arbitrage play between the two metals, the sources said.
Gold masking became possible as a government rule, for the purpose of imports, allowed classification of any alloy containing just 2 percent platinum as an alloy of platinum. The duty differential came into effect from April 1. But in just four weeks since mid-June, the bullion dealers have cleared 13 metric tons of masked gold consignments valued at around $1 billion from customs, compared to total platinum imports of 9.97 metric tons in 2023. Government had imposed the current customs duty on platinum when its price was trading at a significant premium to gold prices which has now reversed.
Source: https://businessworld.in/