Misuse of India–Indonesia FTA for gold imports; Jewellers Federation urges government action

The All India Jewellers & Goldsmith Federation (AIJGF) has raised serious concerns regarding the potential misuse of India-Indonesia Free Trade Agreements (FTA) in the precious metals sector. In a recent representation to the Minister of Finance, the Federation pointed out that some importers are allegedly attempting to bring in gold under the cover of platinum medals so as to benefit from the duty-free concessions given in the FTA.

The Federation further explained that the percentage of platinum in these 'platinum medals' is only around 4 per cent, while 96 per cent is gold. Importers, by getting Certificates of Origin from Indonesia, can legally claim 0 per cent customs duty, which means gold would be imported at almost duty-free rates while being branded as platinum.

The Federation contends that this whole practice is against the Rules of Origin, the concept of 'essential character' in tariff classification and fair trading practices.

AIJGF flags potential consequences

The Federation has pointed out the possible repercussions that will:

1) Create a non-level playing field for honest jewellers, refiners and bullion importers paying full duties on gold

2) Lead to substantial revenue leakage and possible proliferation of similar artificial structures in other tariff lines

3) Open a convenient channel for round-tripping and value-transfer through precious metals, complicating enforcement by Customs, DRI, and other agencies

AIJGF requests immediate measures

Given the urgency of the situation, the Federation has asked the government for the following immediate measures to be taken:

1) Issuing alerts to all Customs and DRI by advising that imports labelled as platinum articles must be strictly examined to ensure that the classification is in accordance with the major metal content.

2) Making CBIC clarifications so that products wherein gold is the main metal do not get FTA advantages just because of a small amount of platinum content.

3) Checking the recent and future shipments to discover the misuse, reclaim the differential duties with interest, and impose punitive measures as per the law.

The Federation showed its commitment to the promotion of clean, transparent, and rules-based trade by asserting that it is only a few instances of opportunistic practices that should not be able to affect the integrity of the FTA regime or the existence of honest traders.

Most importantly, it has offered to hand over comprehensive trade data and instances of actual import violations to the Ministry of Finance or CBIC/DOR for immediate follow-up.