Government of India permits duty free replenishment of precious metals for Jewellery exporters

The jewellery exporters have been permitted to claim duty free replenishment of gold, silver and platinum used in the manufacture of items sold abroad, according to the notification issued by the Ministry of Commerce.

The notification amending Para 4.34(i) of the Foreign Trade Policy has been welcomed by the Gem & Jewellery Export Promotion Council (GJEPC) which had made a number of representations to the government on behalf of the exporters in this regard.

Such replenishment, which had been allowed earlier, was discontinued following the implementation of GST. Restoration of this benefit is a big relief to exporters as it comes at a time when the industry is facing numerous challenges, said GJEPC.

The notification said that the replenishment will be made in accordance with specified procedure and that replenishment of gold / silver / platinum will be subject to applicable Customs regulations.

The jewellery export body has welcomed the resumption of this facility. The government has again permitted gold and silver jewellery exporters to replenish the precious metal duty-free after selling it at international exhibitions, a move which would help in promoting the growth of the sector.

This facility of duty-free replenishment of precious metals was stopped after the implementation of the goods and services tax (GST).

An official of the Gems and Jewellery Export Promotion Council of India (GJEPC) said it is a welcome move as exporters were demanding for quite some time to resume the facility.

Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said, “It was a long-pending demand and logical as IGST (integrated goods and services tax) and ITC (input tax credit) refund provide a refund of GST while replenishment gives benefits of basic customs duty. The two are mutually exclusive.”

Exports of gems and jewellery dipped 8.5 per cent during the April-July 2019 period to USD 9.7 billion.

Gold jewellery declined 4.8 per cent during the period to USD 4 billion. According to jewellery exporters, the rise in import duty of gold to 12.5 per cent in the Budget have impacted the growth of the sector and allowing duty-free replenishment would increase the availability of the precious metal.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. 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 shekhar.ghosh@indoasiancommodities.in.

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