MUMBAI: The directorate general of foreign trade (DGFT) has banned imports and exports of gold and silver jewellery, coins, medallions, etc at zero duty from and to South Korea. Director General of foreign trade, Alok Vardhan Chaturvedi, has signed a notification to this effect on Friday. ET has reviewed a copy of the notification.
Several trade bodies like India Bullion & Jewellers Association (IBJA) and All India Association of Gold Refineries and Mints (AGRM) had had represented before and after imposition of GST from July 1 that duty free imports from countries with which India has signed Free trade agreements (FTAs) or Comprehensive Economic Partnership Agreements (CEPA), like S Korea, would again distorting the market.
They pointed out in the past year such treaties were misused by a few traders who would import articles etc duty free from Indonesia, Thailand and South Korea, melt the same into bars or bullion and sell it including the 10% duty.
The government imposed a Countervailing duty of 12.5% on such imports, curbing the malpractice. However, post GST, since VAT and excise were subsumed into the new indirect tax, doors opened for duty free imports from such destinations, causing consternation among many in the trade. The notification of Friday bans imports from S Korea with immediate effect.
IBJA national secretary Surendra Mehta said the move was "timely" and would bring all gold imports "on an even keel." He said he hoped that the "malpractice " would not shift to other countries with whom India has signed FTAs.
AGRM president Rajesh Khosla in an appeal to the government stated that between July 1-Aug 18, 21 tonnes of gold valued at close to $800 mn were imported duty free from South Korea . Such gold was being melted, they alleged , against the spirit of the treaty with South Korea, and sold in the market including the 10% import duty on bullion . Khosla said government had foregone $79mn in import duty on such imports.
Asked whether some in the trade would begin to misuse FTAs India has signed with other ASEAN nations for such imports, Khosla said that he believed the government would crack down on such imports too.
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