The government has banned exports of gold jewellery, medallions and other articles above 22- carat purity in a bid to check round tripping of the precious metal.
In a notification, the Directorate General of Foreign Trade (DGFT) has said certain provisions of the foreign trade policy (2015-20) are "amended to allow export of gold jewellery (plain or studded) and articles containing gold of 8 carats and above up to a maximum limit of 22 carats only from domestic tariff area and export-oriented units, electronics hardware technology parks, software technology parks and bio technology parks".
This means that export of gold jewellery, medallions and other articles of the precious metal above 22 carat purity is not permitted by any exporter, including from these parks, which are meant for sector-specific shipments.
The DGFT also stated that only those exporters can avail of incentives who are shipping gold jewellery and other articles containing gold of 8 carats and up to a maximum limit of 22 carats and not beyond.
According to an official of the Gems and Jewellery Export Promotion Council (GJEPC), some exporters were availing of export incentives by claiming export of gold items of above 22 carat purity with some value addition.
"This is not possible as India is a net importer of gold and no trader would import above 22 carats gold and export it as it is without value addition. This is not a financially viable business," the GJEPC official, who did not wish to be named, said.
Sharing similar views, an official of the Federation of Indian Export Organisations (FIEO) said that through this notification, the government has banned export of the jewellery above 22 carats and this decision will not impact shipment of gold jewellery as there is significantly less demand for these items in the international market.
The decision came at a time when Indian gold jewellery traders have raised concerns over a surge in gold imports from South Korea.
Gold import from South Korea jumped to USD 338.6 million during July 1 and August 3 this year. The import in 2016-17 stood at 470.46 million.
Under the free trade pact between India and South Korea, basic Customs duty on gold was eliminated.
Further, the 12.5 per cent countervailing duty on gold imports has been subsumed in the Goods and Services Tax (GST).
Accordingly, imports now attract only 3 per cent integrated GST.
Countries impose this duty to discourage import of a product.
India is the world's second-biggest gold consumer after China. The imports mainly take care of demand by the jewellery industry.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)