Govt restricts import of certain gold jewellery & articles amid swelling trade deficit; This country is exempt

The Indian government has restricted imports of certain gold jewelry and articles, requiring a license for importers. This move comes as the trade deficit increases and exports drop. However, the restrictions will not apply to imports under the India-UAE free trade agreement.

Staff Writer
First Published13 Jul 2023
Gold imports contracted by about 40% to USD 4.7 billion in the same period.
Gold imports contracted by about 40% to USD 4.7 billion in the same period.(Mint)

The union government on Wednesday restricted imports of certain gold jewellery and articles amid swelling trade deficit. 

As per the directorate general of foreign trade (DGFT) notification an importer would need a permission of licence from the government for importing these gold products.

Trade gap had hit 5-month high in May as exports dropped 10% in May amid slowing demand from western countries. 

However, DGFT said that the restrictions will not be imposed imports under the India-UAE free trade agreement.

Imports of pearls, precious and semi-precious stones dipped by 25.36 per cent to about USD 4 billion during April-May this fiscal. Gold imports too contracted by about 40 per cent to USD 4.7 billion in the same period.

Overall merchandise imports during April-May this fiscal declined 10.24 per cent to USD 107 billion. The merchandise trade deficit for April-May 2023 stood at USD 37.26 billion against USD 40.48 billion during April-May 2022.

The Ministry of Commerce and Industry did not immediately respond to a request for comment.

The move comes as importers over the last few months have been using a policy flaw to source plain gold jewellery from Indonesia without paying any import taxes.

"Indonesia was never a gold jewellery supplier to India, but in the last few months, bullion dealers imported 3-4 tonnes from Indonesia without paying any import taxes," said a Mumbai-based dealer with a private bullion importing bank.

India levies a 15% tax on gold imports.

"Many dealers got to know about the loophole, and they were also trying to source from Indonesia. The policy change has closed that loophole," he said.

Colin Shah, MD, Kama Jewelry, and former chairman of gems and jewellery export promotion council, said, "Though the steps by the government is to balance the macroeconomics. Gold an a raw material should be available at reasonable prices for the Gems & Jewellery industry to maintain the competitive edge for exports.

(With agency inputs)

 

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