A day after the Finance Ministry increased import duty on gold to 15 per cent from 6 per cent to discourage inflows, the Directorate General of Foreign Trade (DGFT) has tightened the regulatory framework for duty-free gold imports used by the gems and jewellery sector as inputs for exports. It introduced five new restrictive notes under the Standard Input Output Norms (SION).
“Five notes are inserted under SIONs…prescribing conditions for the issuance and monitoring of Advance Authorisations for import of gold,” per the DGFT public notice issued on Thursday.
AA scheme
The Advance Authorisation (AA) scheme for the gems and jewelry sector allows exporters to import gold duty-free, provided it is used specifically to manufacture jewellery for export. The SIONs define how much gold is required to produce a specific amount of jewellery.
Under the revised guidelines, a strict ceiling has been placed, with gold import authorisations capped at a maximum of 100 kilograms.
The DGFT has mandated a physical inspection of manufacturing facilities for all first-time applicants to verify their operational status and capacity. The issuance of subsequent licenses will now be considered only when exporters fulfill at least 50 per cent of the export obligations from their preceding authorizations before new ones are granted, the notice added.
Authorisation holders will have to submit fortnightly performance reports certified by an independent Chartered Accountant to improve compliance.
Monthly report
Regional authorities concerned shall submit a monthly consolidated report to DGFT headquarters containing details regarding the issuance of Advance Authorisations and corresponding import/export transactions of gold to enable centralised monitoring and policy oversight, it added.
The increase in import duty for gold is aimed at discouraging its imports to curb a widening trade deficit and stabilize the Rupee amid the escalating West Asia crisis. The government is moving to preserve foreign exchange for essential energy and defense needs.