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In the new Foreign Trade Policy announced on Wednesday, the government has tightened value-addition and wastage norms for the export of gold jewellery. The new norms will help restrict round-tripping of gold and cut its import of the commodity into the country.
Round-tripping refers to import of gold, followed by export, with minor value-addition, to avail of several benefits. It leads to greater import.
According to estimates, round-tripping of gold in the recent years accounted for about 150 tonnes annually; two years ago, it was as high as 200 tonnes, though there are no official estimates of that.
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For plain jewellery articles, the wastage norm assumed has been cut from 3.5 to 2.5 per cent, while that for value-addition has been raised from three per cent to four per cent.
This adds to the cost of exporting, making round-tripping unviable. Genuine jewellery exports, however, won’t be hit.
An official said the government’s decision followed several rounds of discussion.
Pankaj Parekh, vice-chairman, Gems and Jewellery Export Promotion Council, said, “The new norms will help control circular-trading of gold jewellery; those genuinely adding value will continue to do well.”
In 2014-15, star trading and export houses are estimated to have imported about 400 tonnes of gold, with a part of it being exported. Some entities are said to have exported the gold with negligible value-addition.
The value-addition norm for machine-made jewellery has been raised by 0.5 per cent to two per cent, making circular-trading unviable, said an analyst, adding gold import would decline by 150-200 tonnes a year.
