Government imposes restrictions on import of gold, silver

Amid rising inward shipments of gold, the government has imposed restrictions on import of precious metals. According to a notification issued by the Directorate General of Foreign Trade (DGFT), import of gold in any form has been placed in “restricted” category from the “free” category.

“Import policy of gold in any form, other than monetary gold and silver in any form, is amended from ‘Free’ to ‘Restricted’; import is allowed only through nominated agencies as notified by RBI (in case of banks) and DGFT (for other agencies),” the directorate said.

However, import under advance authorisation and supply of gold directly by the foreign buyers to exporters against orders have been exempted.

The restrictions come in the backdrop of rising imports of gold, which rose by 6.59 per cent to USD 2.94 billion in November from USD 2.76 billion a year-ago.

In September this year, the government had 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 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).

The Directorate General of Foreign Trade (DGFT) had issued a notification in this regard by amending a provision of the foreign trade policy (FTP) which had stated that “no replenishment” of the precious metal shall be available to the exporter or manufacturer where they are availing benefits in respect of exported product.

Earlier, duty-free replenishment was not available for jewellery sold at exhibitions abroad, so exporters were not selling, but now, they will get duty-free gold for the quantity sold abroad, which will give a boost to exports.

Exports of gems and jewellery dipped 8.5 per cent during the April-July 2019 period to $ 9.7 billion. Gold jewellery declined by 4.8 per cent during the period to $ 4 billion. According to jewellery exporters, 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 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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