Gold import surges over 2-fold to USD 16.95 bn in Apr-Sep

New Delhi, Oct 15 () Gold import surged by more than two folds to USD 16.95 billion during the first half of 2017- 18, according to the commerce ministry data.
Gold import, which has a bearing on the country's current account deficit (CAD), was worth USD 6.88 billion in April- September 2016-17.
In September this year, import of the precious metal dipped by 5 per cent to USD 1.71 billion from USD 1.80 billion in the same month of the previous fiscal.
Contraction in gold import last month helped narrow the country's trade deficit to a 7-month low of USD 8.98 billion.
However, the import of the metal is expected to increase on account of the festival season, which has started this month.
Increase in inbound shipments of gold also bloated the current account deficit (CAD) to USD 14.3 billion, or 2.4 per cent of the GDP, in the three months to June in 2017-18.In general terms, CAD refers to the difference between inflow and outflow of foreign exchange that has an impact on the exchange rate.
Worried over surge in gold imports from South Korea, with which India has a free trade agreement, the government restricted inbound shipments of the precious metal.
India is the world's second biggest gold consumer after China. The import mainly take care of demand of the jewellery industry.
At present, gold import attracts 10 per cent duty. The gems and jewellery industry along with the commerce ministry have time and again urged the finance ministry to consider a cut in the import duty.

Korea objects to curbs on gold imports

NEW DELHI: South Korea has objected to India’s move to restrict all forms of gold imports from the country, saying it is not compliant with the norms and that India should have discussed the issue first instead of unilaterally taking the decision. The objection comes ahead of a highlevel meeting of the trade ministers of the two countries in Seoul later this week to review the India-South Korea free trade agreement. On its part, India has reasoned that the move is justified as South Korea does not produce gold but was being used only to circumvent import duty on the metal.

On August 25, India had put all forms of gold import from South Korea in the restricted category wherein importers will need permission from the government before importing them.

“They have raised objections, saying the move is not compliant with norms,” said one official privy to the details. India's decision of a clamp down came in the wake of more than $1 billion worth of gold imports from South Korea between July 1and August 21.

India's FTA with South Korea is called the Comprehensive Economic Partnership Agreement (CEPA) under which the 10 per cent basic customs duty on gold has been eliminated. Under the goods and services tax (GST), the 12.5 per cent countervailing duty on gold imports was replaced by a 3 per cent integrated GST.

Hence, as per the present norms, gold imports from a country with which India does not have a trade pact attract a 10 per cent BCD and a 3 per cent GST, while those from the FTA channel have to pay only the 3 per cent GST.
This makes imports via treaty countries attractive. Another official aware of the development said that South Korea also complained that India could have discussed the issue during the review of the CEPA, which is scheduled for later this week.

Why India banned gold imports from South Korea?

New Delhi: After a surge in import of gold from South Korea, the Directorate General of Foreign Trade (DGFT) in the commerce ministry on Friday banned duty free imports of the yellow metal from the country.

Under the India-South Korea free trade agreement that came into force in 2010, India has allowed duty free import of gold and silver items. However, it imposed 12.5% countervailing duty to offset the equal level of excise duty on gold and silver jewellery items produced domestically.

After goods and services tax (GST) was implemented starting 1 July, countervailing duty was abolished as the new tax regime subsumed excise duty and only 3% GST was imposed on gold. This created a situation where importing gold via South Korea became profitable due to its duty free status even as government continued to impose 10% basic customs duty on import of gold from other countries.

Gold imports from South Korea surged to $339 million between 1 July and 3 August against import of only 70.5 million in the financial year 2016-17.
DGFT on 14 August had prohibited export of gold items above 22 carat as it was feared traders are using the South Korea route to round trip gold items by importing at a lower cost and exporting it at a higher price without much value addition.

India is the world’s second largest gold consumer after China, with consumption of 674 tonnes in 2016. Demand is projected to rise to between 850 tonnes and 950 tonnes by 2020 from an estimated 650-750 tonnes in 2017 buoyed by the new GST regime, according to the World Gold Council.

India imports gold

Gold imports jump over two-fold to $13.35 billion in April-July

New Delhi: India’s gold imports more than doubled to $13.35 billion during the April-July period of the current fiscal, according to the data of the commerce ministry.

Gold imports, which has bearing on the country’s current account deficit (CAD), stood at $4.97 billion in April-July 2016-17.

In July this year, imports of the precious metal rose to $2.10 billion from $1.07 billion in the same month of the previous year.

Surge in gold imports in July contributed to the widening of trade deficit to $11.44 billion as against $7.76 billion in July 2016.

The rise in imports assumes significance as India is recording surge in the inbound shipments of the precious metal from South Korea, with which India has implemented a free trade agreement since 2010.

Officials have stated that the government is contemplating steps to check the surge in imports from that country.

Gold imports from South Korea has jumped to $338.6 million during 1 July – 3 August 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% countervailing duty on gold imports has been subsumed in the Goods and Services Tax (GST). Accordingly, imports now attract only 3% integrated GST.

Under the FTA with South Korea, the government has recently notified rules for investigation of safeguard duties.

Countries impose this duty to discourage imports 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. At present, gold import attracts 10% duty.

The gems and jewellery industry along with the commerce ministry have time and again urged the finance ministry to consider a cut in the import duty.