The director general of foreign trade (DGFT) on Friday notified the withdrawal of the zero-duty import facility for gold, silver, and their coins and articles.
The facility was being misused for importation nontaxable gold from South Korea from July.
Now with immediate result, such import has been illegal by the govt..
The DGFT issued the notification retreating the power given beneath a trade agreement (FTA) with South Korea signed in 2009 relating to gold, silver and their articles.
Sudheesh Nambiath, Lead Analyst (Precious Metals Demand), GFMS Thomson Reuters, said: “Since July just about 27 tonnes were foreign at zero duty from South Korea. ab initio a couple of importers were importation and in July solely ten tonnes of gold arrived beneath this route however in 3 weeks of August, seventeen tonnes came to Asian nation. foreign product enclosed gold jewelry and articles together with coins and medallions conjointly came.”
He aforementioned 25 importers, massive and little, brought in gold beneath this facility.
The notification is timely as a result of it had been a case of blatant misuse of the power, violating the spirit of the trade agreement. Ninety per cent of the import is claimed to own been done by the highest 5 importers.
Importers conjointly unbroken dynamic things burning or declarations beneath completely different customs codes.
As a results of the nontaxable imports, the Indian bullion market was quoting at an enormous discount of $20 per ounce (Rs 425 per ten gram), leading to nearly halting duty-paid import and paralysing the unionized trade.
Shekhar Bhandari, government vice-president, world banking, Kotak Mahindra Bank, said: “Organised gold imports are affected considerably. there's associate degree calculable revenue loss of Rs 750 large integer on account of imports beneath the FTA.”
He additional this was destroying the restrictive framework.
The impact of Indian imports from South Korea was felt elsewhere. Samson Li, senior analyst at GFMS, said: “South Choson contains a processing facility for about a hundred and twenty tonnes each year.” India's import shows levels of violations. per sources, refined gold was sent to South Korea from Dubai, that resulted in Dubai gold discounts turning to marginal premium. Not solely that, gold premiums in South Korean exchanges were bare and failed to move a lot of, indicating gold wasn't deep-mined or refined in South Korea, an important condition for zero duty import by Asian nation beneath the FTA.
The seriousness of the matter was felt by the govt. once it had been found, per officers, that gold coming back from Dubai wasn't LBMA (London Bullion Market Association)-certified couldbe} conflict gold from African countries may have entered Asian nation.
When the Goods and services tax (GST) was introduced at three per cent, the duty of twelve.5 per cent applicable to such imports was subsumed within the GST and this expedited nontaxable imports.
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