India has implemented restrictions on the import of plain gold jewelry in an effort to address loopholes in its trade policy, Reuters reported. As the world's second-largest consumer of gold, India aims to prevent importers from exploiting a policy flaw that allowed them to source plain gold jewelry from Indonesia without paying import taxes.
In a government notification issued on July 12, the import of articles of gold has been moved from the free category to the restriction category. However, imports under the India-United Arab Emirates Comprehensive Economic Partnership Agreement will continue to be allowed without the need for a license.
The Ministry of Commerce and Industry has not provided an immediate comment on the matter.
As per a Mumbai-based dealer with a private bullion importing bank, this recent development is a response to the unexpected surge in gold jewelry imports from Indonesia in the past few months. Indonesia was not traditionally a gold jewelry supplier to India, but some bullion dealers exploited the flaw in the policy, enabling them to import 3-4 tonnes of plain gold jewelry without paying any import taxes.
The tax on gold imports in India is currently set at 15%. The discovery of this loophole prompted many dealers to attempt to source gold jewelry from Indonesia as well. However, the policy change effectively closes this loophole, ensuring that the appropriate taxes are levied on imported gold jewelry.
By restricting the import of plain gold jewelry, India aims to maintain the integrity of its trade policy and safeguard its domestic gold market. This move will likely curb unauthorized imports and ensure that the government receives the necessary tax revenue from gold imports.
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