Talks on Asean gold import ban today
The Economic Times | 29 January 2018
Talks on Asean gold import ban today
by Ram Sahgal
Mumbai: The Directorate General of Foreign Trade (DGFT) has called for a meeting with two of the gold and jewellery trade’s leading bodies — Gem & Jewellery Export Promotion Council (GJEPC) and Bullion Federation of India — on Monday to discuss lifting the embargo of gold articles and jewellery imports from South Korea.
India has signed a comprehensive economic partnership pact with South Korea in 2010 to facilitate mutual trading incentives.
The government, which banned such imports last year after complaints from the trade, is learnt to be considering lifting the embargo. It hosted leaders from the 10 Asean countries, with which it has free trade agreements, at the Republic Day celebrations. The free trade agreements allow bilateral imports at concessional or zero duty between India and Asean counterparts to promote trade.
The ban was effected over complaints by bullion traders through their relevant trade bodies and GJEPC, sponsored by the commerce ministry. Unscrupulous traders were misusing the FTA to import bullion in the guise of jewellery. The government levies a 10 per cent customs duty on bullion imports. Since the ban with South Korea cannot be continued unilaterally under FTA, the government is keen to understand from the trade bodies how it could re-open imports of gold items. The Bullion Federation is not in favour of an "absolute closure," although its director Rahul Gupta states that it is "absolutely not" in favour of importing bullion in the guise of jewellery or other articles from South Korea or any other Asean nation. "We’ll have to figure out ways of protecting domestic trade from any distortion through such imports," said Gupta. "One of the possibilities is banning B2B sales of such imports and mandating that the items be sold in the same form to end-customers. No B2B sales will ensure that trader cannot claim any GST credit."
Pramod Agrawal, chairman,GJEPC, said: "We are more than willing to promote trade and manufacturing through FTA or similar agreements, but our manufacturers and employment prospects should not suffer from market distortions through such agreements." GJEPC might suggest, among others, that gold imports under FTA should be subject to 40 per cent value add norms from the original destination. Certain unscrupulous traders imported gold and silver articles, on-sold them to jewellers who melted the shipments into bullion, or gold bars, and sold them locally, including the 10 per cent duty, making a windfall.
