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The central government is considering a hike in the value addition for gold exports, as another means of discouraging the metal’s import, after having linked any import to its re-export.
The value-addition norm for gold export is three per cent, according to an official of the ministry of commerce, and five to six per cent of the export value if taking place from a Special Economic Zone.
Around 70 tonnes of gold export are expected this year. Since at least a fifth of the import value has to be exported, that would restrict the former to 350 tonnes.
A senior official in the government said the plan would “curb the fly-by-night operators who import gold, mint these into coins or crude jewellery and re-export to Dubai”. Such re-export isn’t genuine, he contended. This type of artificial export, of gold jewellery, also known as round tripping, was estimated at 180 tonnes each in 2011 and 2012.
After the Reserve Bank (RBI) banned consignment imports and said any incoming shipment had to be against 100 per cent cash margin, those who were in round tripping got stuck, as it was a tool for them to get dollar finance at lower rates of interest.
However, when RBI linked gold imports with exports, through the 20 per cent rule, ways began to be explored within the trade for boosting the outward shipment figure, as the country’s demand for gold jewellery is at least 500 tonnes a year. To choke this effort, there is this move to make the value-addition norm more stringent.
