Government may tweak gold import duty: Rita Teaotia

NEW DELHI: The government is likely to tweak the import duties on gold to limit arbitrage opportunities through Free Trade Agreements (FTA). Speaking at an event organised by the Gem and Jewellery Export Promotion Council here on Friday, Commerce Secretary Rita Teaotia observed that free trade agreements (FTAs) tend to be leveraged because India has been raising the import duty on gold “again and again”.

She said the government is seized of the matter and there are implications on both sides. “I think we have to arrive at some sort of balance on duties,” she noted, adding that as long as there is arbitrage there will be people who try to game the system.

The comments come amid a surge in gold imports from South Korea, with whom India has a comprehensive free trade agreement since 2010. Teaotia observed that there was a need to limit such leveraging.

The government has already taken measures to plug the South Korea loophole, imposing restrictions on gold imports from that country. The month of July this year saw gold routed through South Korea surge to $340 billion from just around $70 billion during July, 2016.

While GJEPC Chairman Praveenshankar Pandya pointed out that FTAs need careful examining, Teaotia said that no FTA is entered without “full-fledged” consultations with stakeholders and industry.
The bureaucrat also pointed out that there was huge potential in setting up jewellery parks catering to both domestic and international markets.

The government, she said, intends to enhance the cluster scheme for the jewellery sector and that a NITI Aayog-instituted inter-ministerial group is discussing components on a new gold policy for India.