MUMBAI: Trade bodies such as India Bullion & Jewellers Association (IBJA) and Association of Gold Refineries and Mints (AGRM) hailed the "timely "action taken by the government in banning all duty free gold and silver imports from South Korea, which they allege was distorting the market. But, they are concerned about traders shifting such imports from South Korea to other nations like Indonesia, with which India has signed free trade agreements. Such FTAs facilitate imports and exports at at concessional or nil duty.
"The ban on gold imports from South Korea has happened faster than we expected and is most welcome , " said Surendra Mehta, national secretary, IBJA. " We hope, though, that traders don't misuse FTAs with other countries to recommence such imports."
India has signed a Comprehensive Economic Partnership Agreement with South Korea which allows each country to import or export their goods at concessional or nil duty , and thereby promote trade.But, much of what was being imported from South Korea recently was gold bullion , trade bodies allege, in the guise of coins, medallions and ornaments at zero duty. This was distorting trade as bullion imports from elsewhere attract 10% import duty.
Asked whether such a restriction would be extended to ASEAN nations such as Indonesia, Thailand or Malaysia with which India has signed FTAs, Rajesh Khosla, president, AGRM, said that he believed the government would deal " likewise " with imports from other FTA partners.
Khosla through AGRM had appealed to the government to curb duty free gold imports from South Korea as they were " distorting" the market. He said that from July 1 through August 18, 21 tonnes of gold coins, articles and medallions were imported duty free from South Korea. Though such imports at zero duty themselves were not illegal, the misuse took place as certain traders began melting coins and jewellery into bullion, against the rules of the CEPA that goods should not change their form.
Last year the government imposed a Countervailing duty of 12.5% on gold article and coin imports from FTA destinations to curb misuse by traders who converted them into bullion for a neat arbitrage against duty- levied gold at 10% . However, after GST was introduced from July 1, such imports recommenced from South Korea as Excise along with VAT was subsumed in GST. The importers had only to pay 3% IGST on gold, which was recovered from the customer.
"The ban on gold imports from South Korea has happened faster than we expected and is most welcome , " said Surendra Mehta, national secretary, IBJA. " We hope, though, that traders don't misuse FTAs with other countries to recommence such imports."
India has signed a Comprehensive Economic Partnership Agreement with South Korea which allows each country to import or export their goods at concessional or nil duty , and thereby promote trade.But, much of what was being imported from South Korea recently was gold bullion , trade bodies allege, in the guise of coins, medallions and ornaments at zero duty. This was distorting trade as bullion imports from elsewhere attract 10% import duty.
Asked whether such a restriction would be extended to ASEAN nations such as Indonesia, Thailand or Malaysia with which India has signed FTAs, Rajesh Khosla, president, AGRM, said that he believed the government would deal " likewise " with imports from other FTA partners.
Khosla through AGRM had appealed to the government to curb duty free gold imports from South Korea as they were " distorting" the market. He said that from July 1 through August 18, 21 tonnes of gold coins, articles and medallions were imported duty free from South Korea. Though such imports at zero duty themselves were not illegal, the misuse took place as certain traders began melting coins and jewellery into bullion, against the rules of the CEPA that goods should not change their form.
Last year the government imposed a Countervailing duty of 12.5% on gold article and coin imports from FTA destinations to curb misuse by traders who converted them into bullion for a neat arbitrage against duty- levied gold at 10% . However, after GST was introduced from July 1, such imports recommenced from South Korea as Excise along with VAT was subsumed in GST. The importers had only to pay 3% IGST on gold, which was recovered from the customer.
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