Chennai: Duty-free import of gold and silver in dore or other semi-manufactured forms have been restricted and made subject to approval from authorised agencies. The move is expected to restrict the increasing duty-free import of precious metals from countries with which India has signed free trade agreements.
In a notification published on Wednesday, the government said that: "import policy of gold other than monetary gold and silver in any form is amended from 'free' to "restricted"; import is allowed only through nominated agencies authorised by the RBI (in case of banks) and DGFT (for other agencies)".
This includes gold and silver in the powder form, unwrought form, sheets, plates, strips, tubes and pipes, other unwrought forms, other semi-manufactured forms etc.
"As the import duty on gold is 12.5 per cent, we have been witnessing huge import of duty-free gold from countries like South Korea, Thailand and Malaysia, which have signed free trade agreement with India. Individuals could import products, including gold and silver, without seeking any permission," said Vipin Raina, India President (Marketing), MMTC-PAMP.
In the case of South Korea, India had entered into a Comprehensive Economic Agreement with that country, which allows for duty-free exports without any value addition. Hence, South Korean exporters have been shipping a lot of gold coins to India.
In the pre-GST era, the government had levied a countervailing duty of 12.5 per cent on such imports almost around the time it imposed excise duty on gold in the domestic market. Post-GST, this countervailing duty did not exist and hence the imports had become duty-free.
Since 2017, the import of duty-free gold has been going up. As per WTO norms, India cannot apply duties on select products under free trade agreement. Hence, the government has restricted imports. Individuals who want to import these products should obtain prior licence from RBI or DGFT.