The government on 25 August 2017 restricted imports of gold and silver items from South Korea in a bid to check spurt in inbound shipments of precious metals from that country. The importers will now have to obtain a license from the Directorate General of Foreign Trade (DGFT) for importing gold and silver from South Korea.
These restrictions are being imposed against the backdrop of sudden surge in imports of precious metal from South Korea, with which India has a free trade agreement since January 2010. Gold imports from South Korea has jumped to USD 338.6 million between July 1 and August 3 this year. The import in 2016-17 stood at USD 70.46 million.
Under the free trade pact between India and South Korea, basic customs duty on gold was eliminated. Further, the 12.5 per cent countervailing duty on gold imports has been subsumed in the Goods and Services Tax (GST). Accordingly, the imports now attract only 3 per cent integrated GST. Imports of gold from non-FTA countries, attract 10 per cent customs duty. India is the world’s second biggest gold consumer after China. The imports mainly take care of demand by the jewellery industry.
The collections from customs duty and IGST from imports post implementation of GST has almost doubled to Rs 30,000 crore in July. Gold imports contributed significantly to this increased collection. The revenue collected include those on account of customs duty, Integrated-GST (IGST) from imports, countervailing duty (CVD), special addition duty (SAD) and cess collection on imported items.