The Union government on Wednesday restricted imports of certain gold jewellery and items amid a widening trade deficit.
As per the notification issued by the Directorate General of Foreign Trade (DGFT), an importer would need a licence from the government to import these gold products.
The trade gap had hit a 5-month high in May as exports fell 10% in May amid slowing demand from western countries.
However, the DGFT said the restrictions will not be imposed on imports under the India-UAE FTA.
Imports of pearls, precious and semi-precious stones fell by 25.36 per cent to about USD 4 billion in April-May this fiscal. Gold imports also declined by about 40 per cent to USD 4.7 billion during the same period.
Overall, merchandise imports declined by 10.24 per cent to USD 107 billion during April-May this fiscal. The merchandise trade deficit during April-May this fiscal stood at USD 37.26 billion, as against USD 40.48 billion during April-May 2022.The commerce and industry ministry did not immediately respond to a request for comment.
The move comes after importers took advantage of a policy flaw in recent months to source plain gold jewellery from Indonesia without paying import taxes.
“Indonesia has never been a supplier of gold jewellery to India, but in the last few months bullion dealers have been importing 3-4 tonnes from Indonesia without paying any import duty,” said a Mumbai-based dealer with a private bullion import bank.
India levies a 15% tax on gold imports.
“A lot of dealers got to know about the loophole and were also trying to source from Indonesia. The policy change has closed that loophole,” he said.
Colin Shah, MD, Kama Jewellery, and former chairman of the Gems and Jewellery Export Promotion Council, said: “Although the government’s steps are to balance the macro-economy. Gold as a raw material should be available at reasonable prices for the gems and jewellery industry to maintain the competitive edge for exports.
