New Gold Import Norms Irk Exporters

Serious meetings are being held in Delhi between the jewellery exporters and the government to solve the problem of payment of high custom duty on gold imports. Gold jewellery exporters had, in protest of the same, stopped exporting jewellery from February 16 to 19. This resulted in loss of exports to the tune of around Rs 70/75 crore.

The gold jewellery exports during the current year are likely to touch US$850 million against US$747 million during 96-97. The gold jewellery, which has great export potential, should be identified as a thrust item and due significance should be given to it, exporters have demanded.

 

Praveenshankar Pandya, chairman of the Gem & Jewellery Export Promotion Council has said that the export of gold jewellery is highly competitive value-added business with low margins and high working capital requirement. Indian exporters need constant and uninterrupted supply of gold to execute export orders which otherwise may be lost to international competitors.

Instead of promoting exports and making the export procedures simple and smoother, the government it is alleged, works the other way round. The recently introduced revised procedure for the gold jewellery export has made it mandatory for exporters to file an ex-bond bill of entry for obtaining supplies from private bonded warehouses of nominated agencies for export purposes. This has proved to be cumbersome as well as adding to the cost of operation, Pandya said. This procedure was introduced in Delhi and Calcutta since July 1997 and has been introduced in Mumbai from January .

In the past, under option A, exporters received gold only after an equivalent quantity of gold had been exported. Under option B, exporters had to purchase gold and submit a bank guarantee for the difference between the international and domestic rates. This was directly handled by the exporter with the nominated agency. This was found to work smoothly for the past 15 years.

But in the light of the changes announced in the government's policy permitting the nominated agencies had to import and supply gold to the domestic market at concessional rate of duty of Rs 220 per 10 gm. The revised procedure which required the exporter to furnish an ex-bond bill of entry for 72 per cent of value of gold purchased or taken on loan basis, is a very harsh and unpractical and a clear disincentive to exports.

The council has consistently urged the govt to let the status-quo continue i.e., availing of the precious metals directly from nominated agencies by filing the required bank guarantee with the agency concerned. The council suggested measures which require urgent govt attention to achieve export growth of gold jewellery:

(a) The gold should be supplied to them under options A and B under the procedures as they existed before July 1997; (b) at least 10 per cent of gold imported by the newly nominated banks for supply to the domestic market be reserved for exporters under the export promotion schemes;(c) the value of bond if any, to be submitted to the customs should be compatible to the concessional rate of duty payable by the domestic users which is approximately 6 per cent; and (d) the procedure for filing an ex-bond bill of entry needs to be dispensed with as a bank guarantee equivalent to the concessional rate of duty is considered adequate to protect the duty increase of advance release of gold to exporters.