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Govt bans gold import at zero duty from South Korea

Revenue loss estimated at Rs 750 crore

Rajesh Bhayani  |  Mumbai 


The (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 importing duty-free from from July.

Now with immediate effect, such import has been banned by the government.

The issued the notification withdrawing the facility given under a (FTA) with signed in 2009 regarding gold, silver and their articles.

Sudheesh Nambiath, Lead Analyst (Precious Metals Demand), GFMS Thomson Reuters, said: “Since July approximately 27 tonnes were imported at zero import duty from Initially a few importers were importing and in July only 10 tonnes of arrived under this route but in three weeks of August, 17 tonnes came to India. Imported goods included jewellery and articles including coins and medallions also came.” 

He said 25 importers, big and small, brought in under this facility.

The notification is timely because it was a case of blatant misuse of the facility, violating the spirit of the Ninety per cent of the import is said to have been done by the top five importers. 

Importers also kept changing items of import or declarations under different customs codes. 

As a result of the duty-free imports, the Indian bullion market was quoting at a huge discount of $20 per ounce (Rs 425 per 10 gram), resulting in virtually halting duty-paid import and paralysing the organised trade.

Shekhar Bhandari, executive vice-president, global banking, Kotak Mahindra Bank, said: “Organised imports have been affected significantly. There is an estimated revenue loss of Rs 750 crore on account of imports under the FTA.” 

He added this was destroying the regulatory framework.

The impact of Indian imports from was felt elsewhere. Samson Li, senior analyst at GFMS, said: “has a refining facility for approximately 120 tonnes per year.” India's import shows levels of violations. According to sources, refined was sent to from Dubai, which resulted in Dubai discounts turning to marginal premium. Not only that, premiums in South Korean exchanges were meagre and did not move much, indicating was not manufactured  in South Korea, an essential condition for zero duty import by India under the FTA.

The seriousness of the matter was felt by the government when it was found, according to officials, that coming from Dubai was not LBMA (London Bullion Market Association)-certified and perhaps conflict from African countries may have entered India.

When the goods and services tax (GST) was introduced at 3 per cent, the countervailing duty of 12.5 per cent applicable to such imports was subsumed in the GST and this facilitated duty-free imports.



First Published: Sat, August 26 2017. 02:34 IST