The decision comes amid broader economic concerns, as India’s total gold imports have risen sharply, driving the goods trade deficit to a five-month high of $19.1 billion in April
New Delhi: In response to a dramatic increase in gold jewellery and parts imports, the Indian government has imposed immediate restrictions on these imports, except for those from the UAE under the existing free trade agreement (FTA). This move follows a report from the Directorate General of Foreign Trade (DGFT) indicating a 30-fold increase in these imports, from $52 million in 2022-2023 to $1,551 million in 2023-2024.
The surge in gold imports has raised concerns within various government departments, leading to extensive consultations. Investigative agencies focused on curbing smuggling activities have flagged the spike, particularly imports from Least Developed Countries (LDCs) and nations with which India has FTAs. These agencies believe that importers are exploiting lower tariffs from these countries, contributing to the surge.
A government official clarified that the restrictions, covering five specific Harmonised System of Nomenclature (HSN) codes, are not a ban but a measure to monitor and understand the reasons behind the unusual import surge and to track the geographical origins of these imports more effectively.
The decision comes amid broader economic concerns, as India’s total gold imports have risen sharply, driving the goods trade deficit to a five-month high of $19.1 billion in April. Gold imports alone surged by an astonishing 209% to $3.11 billion in April 2024, compared to $1 billion in April 2023.
The Finance Ministry increased import duties on a specific, lesser-known category of the jewellery segment called gold findings. These small components, such as hooks, clasps, clamps, pins, and screws, are crucial for holding pieces of jewellery together. The import duty on gold and silver findings was raised from 11% to align more closely with the 15% duty on gold and silver bars. This measure was aimed at closing a loophole that allowed importers to exploit duty differences by importing gold in the form of findings and coins rather than bars.
High gold prices, combined with elevated import duties, are cited as key factors driving increased smuggling activities. The government’s latest move aims to curb these activities and ensure better regulation of gold imports.
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