Even as the finance ministry hiked duties on gold and platinum, the commerce ministry has red-flagged import of the precious metal from Thailand. Sources told CNBC-TV18 that the commerce ministry suspects that Indian importers are misusing the duty free pact with Thailand to import bullion from the South East Asian nation. CNBC-TV18's Rituparna Bhuyan reports.
Currently, there is a duty free pact between India and Thailand, whereby 80 products are traded with duty benefits, which includes gold jewelry. However, this benefit comes under the condition is that there has to be 20 percent value addition in Thailand, so that while importing into India that consignment of gold jewelry enjoys duty benefits.
Commerce ministry has reasons to suspect that this arrangement—the duty free pact between India and Thailand—is being misused by Indian importers. Basically, the value addition norm of 20 percent is being misused and in the gab of gold jewellry gold bullion is being imported into India.
Two things are going to happen. 1) India may ask Thailand to exclude gold jewellry from this duty free pact; 2) India may ensure that in their proposed India-Thailand free trade agreement (FTA), gold and gold jewellry is not part of the treaty.
The commerce ministry has spotted an increase in jewellry imports from Thailand to about 200 percent in recent years. So, while the finance ministry has gone ahead and hiked duty on gold imports, its commerce counterpart is ensuring that there are no loopholes to import gold into India through the duty free route.