The Directorate General of Foreign Trade (DGFT) has introduced stricter regulations for duty-free gold imports by the gems and jewellery sector, capping authorisations at 100 kilograms maximum. According to the DGFT public notice issued on Thursday, five new restrictive notes have been inserted under the Standard Input Output Norms (SION) to prescribe conditions for issuance and monitoring of Advance Authorisations for gold imports. The move comes a day after the Centre sharply raised import duties on gold and silver to 15% from 6% in a bid to support the rupee amid rising geopolitical tensions linked to the conflict in West Asia. The new rules are aimed at strengthening compliance and monitoring in the gold import ecosystem, with the Public Notice stating that the five new notes have been inserted under SIONs M-1 to M-8 of the Handbook of Procedures 2023. As per PTI, the government has tightened conditions for issuing and monitoring advance authorisation for gold imports, with the scheme previously having no limit on gold imports under the Advance Authorisation scheme.
Under the revised guidelines, the DGFT has mandated physical inspection of manufacturing facilities for all first-time applicants to verify operational status and capacity. As reported by ANI, the notice states that "in case of application for Advance Authorisation by a first-time applicant, a mandatory physical inspection of the applicant's manufacturing facility shall be undertaken by the concerned regional authority to verify the existence, capacity and operational status of the manufacturing facility." Subsequent license issuance will now be considered only when exporters fulfill at least 50 per cent of export obligations from their preceding authorizations before new ones are granted. Authorisation holders must submit fortnightly performance reports certified by an independent Chartered Accountant to improve compliance monitoring. According to PTI, the AA holder will have to submit a fortnightly performance report, which should be duly certified by an independent chartered accountant certifying gold imports and exports undertaken. The measure is aimed at preventing misuse of the scheme through multiple authorisations.
Regional authorities will now submit monthly consolidated reports to DGFT headquarters containing details regarding Advance Authorisation issuance and corresponding import/export transactions of gold. According to the DGFT notice, this centralised monitoring system aims to enable better oversight of the gems and jewellery sector's gold import activities. The Advance Authorisation scheme allows the duty-free import of inputs that are incorporated into an export product, with SIONs defining the required gold quantities for specific jewellery production amounts. In addition to any inputs, packaging material, fuel, oil, and catalyst that are consumed or utilised in the process of production of export product, are also allowed. The scheme allows exporters to import gold duty-free specifically for manufacturing jewellery for export, with the Advance Authorisation holder required to submit performance reports to the concerned Regional Authority.
The increased import duty for gold is aimed at discouraging imports to curb a widening trade deficit and stabilize the Rupee amid the escalating West Asia crisis. As reported by ANI, India is among the world's largest importers of gold, and gold imports significantly impact the country's current account deficit and foreign exchange outflows. The government is moving to preserve foreign exchange for essential energy and defense needs. The stricter regulatory framework represents a comprehensive approach to managing gold imports while maintaining the duty-free facility for legitimate export-oriented manufacturing activities in the gems and jewellery sector. The revised import duty structure has pushed the total tax incidence on gold imports to 18.45% compared to 9.18% earlier, with the rupee having fallen to a record low of 95.75 against the US dollar on Tuesday before recovering partially after the government announced higher duties.
