NEW DELHI: In a move to curb surging gold and silver imports from South Korea, the government has decided to put these items in the restricted category wherein importers will need permission from the government before importing them.
This comes in the wake of more than a $1 billion worth gold imports from South Korea between July 1-August 21.
The restriction has been imposed on all forms of gold and silver including coins and jewellery.
India has a free trade pact South Korea under which basic customs duty on gold has been eliminated. Further, the 12.5% countervailing duty on gold imports has been subsumed in the Goods and Services Tax (GST). Hence, the imports now attract only 3% integrated GST.
Outside the free trade agreement, gold imports attract 10% customs duty.
"The arbitrage is 3% and 10%. The loophole needed to be plugged in to stop treaty shopping," said an official aware of the development.
India is the world's second biggest gold consumer after China.
At present, there are 400 plus items in the restricted imports list which includes animals, certain seeds, uranium and explosives among others.
The Directorate General of Foreign Trade categorises imports as open, restricted and prohibited.
"This move will not hit South Korea and is in line with WTO norms. There Js no violation of FTA norms," the official added.
Gold imports rose 95% on year in July to $2.1 billion.
Source: economictimes.indiatimes.com