Govt Imposes Import Curbs on Precious Metal to Stop Liquid Gold Inflow

As the illegal inflow of gold gained prominence in India, the government has decided to impose import curbs on various colloidal precious metals. These metals are formed through the suspension of silver and gold nanoparticles, which later get dispersed in liquid. Therefore, it was important to tighten gold import regulations so that importers couldnt move illegal yellow metal in the name of chemical compounds. Industry experts have expressed that certain exporters have used this route for imports via countries such as Thailand. The Directorate General of Foreign Trade (DGFT) issued a notification quashing the free import of items covered under CTH 2843. They will now have restrictions.

Goods Covered Under CTH 2843

CTH 2843 covers a wide range of goods including colloidal precious metals. They can be organic or inorganic compounds of precious metals. The DGFT official said that the government has allowed imports of these metals for the manufacturing and industrial sectors. These include electrical, electronics and specialized chemical industries. This will help address the local industry demand without disrupting the actual use.

DGFT Issues Another Notification on Palladium, Iridium and Rhodium Alloy

The DGFT issued another notification restricting the import of rhodium, iridium and palladium alloy consisting of 1% gold. This decision adds to the preventive measures against platinum import to ensure a uniform import policy concerning precious metals and their alloys.

Stats on Illegal Gold Flow into India

As per industry estimates, India receives one-fourth of the total gold shipment via illicit means. Annually, India imports approximately 800-900 tonnes of gold. The annual consumption stands at approximately 1000 tonnes. This means around 200 tonnes of gold is shipped into the country illegally. In terms of trade value, it grosses $1 billion. The government loses $20 million in tax revenue through this illegal gold shipment route.

The Routes by Which Illegal Gold Enters India

Even as the government tightens illegal gold import by imposing heavy security checks at airports, ports and other areas, the smugglers find a way to ship the yellow metal into India. As per the estimates shared by the World Gold Council (WGC), smugglers ship around 65-75% of gold via airways. Around 20-25% of gold is illegally shipped through sea. Through land, the smuggling shipment percentage remains 5-10%. At the current gold price in India, smugglers can gain a profit of 10 lakh. The live gold price per 10 grams stands at above INR 1 lakh in India.

What Has the Government Done to Curb Illegal Gold Imports?

The government has reduced the import duty on gold from 15% to 6% in the Union Budget 2024-25. Heavy import duty was seen as a major contributor to illegal gold shipment into India. While it has succeeded in curbing the illegal import, shipments are still coming illegally. The latest announcement on the illegal movement of liquid gold is a reminder of the same.