The Directorate General of Foreign Trade (DGFT) has mandated completion of export obligations within 120 days of import, to ensure that duty-free imports directly support genuine export production
New Delhi: The Government has tightened export compliance norms for jewellery manufacturers under the Advance Authorization Scheme to address procedural gaps amid rising gold imports, a major contributor to India’s widening trade deficit. The Directorate General of Foreign Trade (DGFT) has aligned export timelines with the Foreign Trade Policy (FTP) 2023, mandating exporters to complete their obligations within 120 days of import and removing any provision for extensions.
The move follows a sharp rise in India’s gold imports, which nearly doubled to $9.6 billion in September from $4.6 billion in August, driven by festive demand and speculative buying. This surge pushed the trade deficit to a 13-month high of $32.15 billion in September, mainly due to bullion imports.
By setting fixed deadlines, the DGFT seeks to prevent exporters from using procedural flexibility to stock gold imported duty-free instead of using it for export production. The objective is to ensure stricter oversight, reduce misuse, and maintain that duty-free imports are directed towards genuine export manufacturing amid record bullion prices and increased import volumes.
As per the amendment notified by the DGFT, exporters must fulfil their export obligation within 120 days from the date of import of each consignment against the authorisation. For items such as clasps and mountings made of gold, platinum, and silver used in jewellery manufacturing and export, the timeline remains 180 days from the date of import.
The revised Para 4.84(b) of the Handbook of Procedures (HBP) 2023 states that advance authorization holders may import gold as replenishment only after completing their exports. The DGFT clarified that this amendment aligns the Handbook with Para 4.36(a) of the FTP, ensuring both documents contain identical procedural provisions.
A senior DGFT official in the know said that the earlier phrasing of the rule had caused confusion in implementation and created procedural inconsistencies between the handbook and the trade policy document. “The intent was always clear: export obligations under advance authorization must be completed within 120 or 180 days, depending on the product category. This notification simply removes any ambiguity,” the official said.
The timing of the clarification has, however, drawn attention. Latest government data shows India’s gold imports rose sharply in September, driven by festive demand and speculative buying, even as global gold and silver prices hit record highs. Gold imports doubled to $9.6 billion in September from $4.6 billion in August. In quantity terms, imports rose to 102 tonnes in September from 61 tonnes in August.
Industry representatives said the clarification will help exporters plan production and shipments more efficiently. “Uniform timelines make compliance easier and reduce the scope for interpretational disputes. Exporters now know exactly when the obligation period starts and ends,” said Surendra Mehta, National Secretary of India Bullion and Jewellers Association (IBJA).
The move is also expected to discourage advance stocking of inventory and prevent hoarding of gold, as importers will now be allowed to bring in supplies only after fulfilling their export obligations, Mehta said.
The Advance Authorisation Scheme allows exporters duty-free import of inputs used exclusively for manufacturing export products. Exporters must fulfil their obligations within a specified timeframe to prove that the imported materials were used for export production.
The gems and jewellery sector, which contributed $29.80 billion to India’s exports in FY25, remains a major user of the scheme. Although exports fell from $32.70 billion in FY24, the sector continues to be a significant employment generator, providing work to about 5 million people.
After reaching new highs, with 24-karat gold crossing Rs 1.27 lakh per 10 grams ahead of Diwali on October 18, prices eased slightly to Rs 1.22 lakh per 10 grams on October 24.
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