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Government mulls keeping gold jewellery out of all free trade agreements through re-negotiations |
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NEW DELHI: India will keep gold jewellery out of all free trade agreements (FTAs) to be signed in the future while it contemplates removing the item from existing ones through renegotiations, said two government officials familiar with the matter. The finance ministry and the commerce department are in dialogue over imposing the clampdown.
The move is aimed at damage control after gold jewellery from third countries under the India- Thailand FTA and the India-Asean FTA flooded the markets after customs duty was raised on imports through regular channels. Asean is the Association of Southeast Asian Nations and includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
"We have sought removal of gold jewellery from FTA," said one of those cited above. "Wherever it has been included, it would require renegotiation."
The finance ministry had brought the matter up with the commerce department, which negotiates trade arrangements.
India has been faced with gold jewellery imports from Thailand at a lower duty under the early harvest scheme, defeating its move to discourage imports by raising duty and prevent further erosion of its current account deficit, which had ballooned in 2012.
Gold jewellery imports from Thailand have been suspended since 2013. These imports violated the rules of origin that mandated 20% value addition. In the case of gold jewellery, the value addition was not possible as gold rates in Thailand were at the same level as India and would have pushed up costs, rendering such imports uncompetitive.
A fresh issue has now come up with regard to jewellery imports from Indonesia under the India-Asean pact bring liable to an import duty of 2% as against 10% under normal trade channels. India has written to the Indonesian authorities regarding this, said another government official, adding that violation of rules of origin is suspected.
The revenue department is not willing to take any chances, especially when it concerns a sector that employs more than 40 lakh small artisans. India is in the midst of negotiations for trade pacts with some key countries and groupings, including the Regional Comprehensive Economic Partnership (RCEP), and the government wants to tread cautiously with respect to jewellery being included as a tradeable item in such arrangements. The Regional Comprehensive Economic Partnership involves the 10-member Asean, Australia, China, Japan, South Korea and New Zealand besides India.
Source : economictimes.indiatimes.com
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