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Gold duty cut may become a sticking point in India-EFTA talks

India is in a spot as its already grappling with a surge in gold imports from its FTA partners, including South Korea and Asean member Indonesia

Press Trust of India  |  New Delhi 

Representative image
Representative image

Elimination of duty on could become a sticking point in the ongoing negotiations for a agreement between and the group, sources said.

and the European Association (EFTA) countries -- Switzerland, Norway, Iceland and Liechtenstein -- are in the process of putting in place the agreement, officially known as the Trade and Economic Partnership Agreement (TEPA).

is in a spot as it is already grappling with a surge in from its FTA partners, including and member Indonesia.

In the bloc, is a major exporter of items, including gold bars.

Given a significant increase in of the precious metal from some of the free trade pact partners, it will be a little tricky for Indian negotiators to agree to complete elimination of duties on gold from the group, the sources pointed out.

is a leading centre in the world for gold refining and India remains one of its major destinations.

India is the world's second-biggest gold consumer after China. The mainly take care of demand by the jewellery industry.

The two-way trade between India and EFTA slumped to USD 19 billion in 2016-17, from USD 21.5 billion in 2015-16. The trade gap is highly in favour of the EFTA.

Under a free trade pact, partners offer market access to each other by eliminating or significantly reducing duties with a view to promoting bilateral trade in goods. Besides, both sides liberalise norms to enhance trade in services and shore up investments.

The has put in restrictions on imports of gold items from to check spurt in the in-bound shipments of precious metals from that country.

Similarly, the government is exploring ways to curb increase in the imports from Indonesia, which crossed 600 kg during July-August.

Increase in gold imports puts pressure on the country's current account deficit (CAD), which in turn affects the value of the rupee.

Currently, there is a 10 per cent Customs duty on gold imports, in addition to 3 per cent Integrated GST (IGST).

First Published: Fri, September 29 2017. 21:54 IST