Government of India withdraws duty free gold import for jewellery exporters

The Director General of Foreign Trade (DGFT) issued a public notice last week to discontinue duty free import of gold before exports. The move is meant to arrest the misuse of incentives offered on gold jewellery export.. The restricting move by the government has come a few months after the exposure of a scam in large jewellery houses in February this year.

However, in order to reduce the hardships of small exporters, it has allowed four months for re-exporting gold jewellery.

Some export houses were said to be misusing the Advance Authorisation scheme for jewellery exports. The scheme allowed exporters to import gold required for their shipments abroad without paying import duty. While this facility of duty free import before export has been withdrawn, exporters have been allowed four months’ time to re-export jewelry made from imported gold. In such cases, exporters will have to claim refund of import duty after exporting.

The DGFT has only stated that export obligation period with pre-import condition has been extended to 120 days (earlier 90 days) from the date of clearance of each import consignment by customs authority.

Sources said the discontinuation of the advance authorisation or duty free import facility was being grossly misused by some large players having their refineries to re-export gold with little value addition.

They were doing round tripping or importing gold and re-exporting with much less than the mandated value addition either to take advantage of the interest arbitrage or to inflate the balance sheet.

Earlier, DGFT has banned the export of jewellery and medallions with purity of more than 22 carats, but that failed to cap round tripping. According to estimates by GFMS Thomson Reuters, approximately 157 tonnes were used for round-tripping in 2017, up from 125 tonnes in 2016.

However, even four months’ export obligation period may also be misused by some, especially when the premium in Indian market increases. According to GFMS data, in 2017, 18.1 tonnes was moved to the domestic market unofficially before re-exporting within the 90 day period. Now the period has been extended to 120 days.

Shekhar Ghosh is consulting editor, He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at


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