The Directorate General of Foreign Trade (DGFT) said that the import cap will not apply to imports made in accordance with the Free Trade Agreement between India and the United Arab Emirates.
The Centre has implemented import restrictions on certain gold jewellery and articles, in a bid to reduce the import of non-essential items.
The Directorate General of Foreign Trade (DGFT) on Wednesday issued a notification that from now on, importers will have to take permission or a licence from the government for importing certain gold items into the country.
It added that the import cap will not apply to imports made in accordance with the Free Trade Agreement between India and the United Arab Emirates.
Restrictions mean that a license will be required from the government to import these goods though no such permission is required for imports under the India-UAE Comprehensive Economic Partnership Agreement (CEPA) tariff rate quota.
“However, import under a valid India-UAE CEPA TRQ shall be permitted freely without any import license,” the DGFT said.
The new restrictions have been imposed on the back of a rise in imports from Indonesia under the India-ASEAN free trade agreement wherein some articles of gold were coming duty free and being melted in India to make jewellery, Reuters reported.
In April-May FY24, India imported $112.09 million of these products, of which $76.28 million came from Indonesia. Gold imports attract 15 per cent duty.
“Indonesia was never a gold jewellery supplier to India, but in the last few months, bullion dealers imported 3-4 tonnes from Indonesia without paying any import taxes,” a Mumbai-based dealer with a private bullion importing bank told Reuters.
“Many dealers got to know about the loophole, and they were also trying to source from Indonesia. The policy change has closed that loophole,” he said.
Besides, imports of pearls, precious and semi-precious stones fell by 25.36 per cent during the first two months of the current fiscal year, totaling around $4 billion. Additionally, gold imports decreased by about 40 per cent over the same time to $4.7 billion.
During April and May of the current fiscal year, there was a 10.24 per cent decline in total merchandise imports, which came to $107 billion.