The directorate general of foreign trade (DGFT) has finally done away with any quota for local exporters in the total import of precious metals.
This forms part of the new consolidated guidelines by DGFT for the import of precious metals, released towards the end of the previous month. The guidelines were withdrawn in the beginning of 2011, amidst controversy that exporters get relatively cheaper raw material of precious metal, especially gold, but could bargain for much higher rates from exports of processed gems and jewellery. Local trade bodies had raised the issue of partial treatment to exporters, which amounted to unfair market practices that places them in an advantageous position compared to domestic manufacturers and retailers of gold and other gems and jewellery.
Exporters, on the other hand, had represented through various forums for retaining the quota, since gems and jewellery comprise of high-value exports and, thus, higher earnings for the country.
DGFT conducted a comprehensive review of the guidelines for import of precious metals by nominated agencies and examined the claims of the domestic players. Thus, while there was no guideline for import of precious metals since February, the new guidelines released towards the end of August will be effective retrospective from February. Prior to this, a specific amount of import of gold and other precious metals was earmarked for supply to exporters. While the proportion to total import was 10 per cent in 2009, it was raised to 15 per cent in 2010. Officials added an importer is free to sell the consignment according to demand and supply.
The new guidelines have tightened monitoring of gems and jewellery imports and related value-added exports by premier and star trading houses. While these entities will be required to file half-yearly returns to local offices of DGFT, the Gems and Jewellery Export Promotion Council will have the onus if any such entity fails to report. Moreover, trading houses and star houses will be required to file separate returns for distribution of total imports among local retailers and usage in value-added exports.
An official source said, “The import procedure has been relaxed, as the government’s only concern is the payment of import duty. The authorities will keep track of imports from periodic filings by these agencies. We will check the disclosure and declaration made during the imports. The nominated agency can sell it to whoever it likes.”
A local importer of gems and jewellery said jewellery exporters will have to buy the entire raw material from the open market, taking away a part of the price advantage they had in procuring gold or silver.The source said the priority should be to make gold available to the domestic market at a reasonable price. The price has shot up from Rs 23,080 per 10g to Rs 28,110 per 10g over the last month.