Govt tightens rule for star export houses

Only exports from domestic tariff areas would be counted and such exports have much better vigilance mechanism

The Directorate General of Foreign Trade (DGFT) has tightened the rules for export houses which wish to import gold in their capacity as a nominated agency.

The public notice to this effect says for getting permission as a nominated agency, only exports from the Domestic Tariff Area (DTA) would be counted. At present, apart from banks and government-owned MMTC, export promotion councils, star and premium trading houses are allowed to import gold for the domestic market.

Now, says DGFT, “the export performance of gem and jewellery items, special economic zones and export-oriented units (SEZs/EOUs) will not be clubbed with the export  performance of DTA units for grant of nominated agency certificate.” The notice no 37/2015-2020 dated October 4 was made available only this week.

A veteran trade analyst said: “Some leading export houses were allegedly misdeclaring gold jewellery exported from SEZs/EOUs to be of 22-carat jewellery when they were actually exporting 18-carat carat, saving around eight per cent of gold imported duty-free in the name of exporting back, and then selling  that gold in the open market in India. Since DTA exports have tighter vigilance mechanism, such a practice will be arrested.”

Two-third of gold jewellery is exported from SEZs/EOUs. The said practice was putting other nominated agencies like banks and MMTC at a disadvantage, especially in the past six months when the price was quoting at a huge discount.  Harish Acharya, secretary, Bullion Federation, said: “We had represented to the government to stop this practise.”

Meanwhile, prices in Mumbai’s Zaveri Bazaar closed at Rs 30,695 per 10 gm for 999 purity gold, Rs 245 higher from Tuesday’s price. Price went up by Rs 800 per 10 gm in the last 15 days.  Gold (999 purity) price on Wednesday closed Rs 1,125 per 10 gm higher than the price sovereign gold bonds were issued by the government.

Prices were rising on possibilities of Republican candidate Donald Trump winning the US elections, which is seen as a big positive for the yellow metal. In the international market, gold is currently trading near $1,297.5 per ounce.

Due to higher global prices, Indian market, which was at a slight premium in past few days ahead of Diwali, went back to discount. According to NCDEX polled data, gold on Wednesday was quoted at $3 discount per ounce.