The government has implemented strict controls on gold imports under the Advance Authorisation scheme, capping permissible quantities at 100 kilograms per import application. According to a DGFT notification issued on Thursday, the Directorate General of Foreign Trade has inserted five new notes under Standard Input Output Norms (SIONS) M-1 to M-8 of the Handbook of Procedures 2023 with immediate effect. This represents a significant tightening of import regulations for the gems and jewellery sector, coming just a day after the government significantly increased import duties on precious metals. The Advance Authorisation scheme allows jewellery exporters to import raw or input materials at zero duty, with the new quantity limits applying to all such imports. As per ETGovernment, earlier there was no limit on gold imports under the scheme, making this a complete shift in import policy.
The notification introduces stricter verification processes for new applicants seeking gold import permissions. As reported by the DGFT, first-time applicants must undergo mandatory physical inspection of their manufacturing facilities by concerned regional authorities. These inspections are designed to verify the existence, capacity, and operational status of manufacturing facilities before approval is granted, ensuring proper compliance with import regulations. The enhanced compliance framework reflects the government's commitment to ensuring proper oversight of gold import activities under the Advance Authorisation scheme, with the move aimed at regulating gold imports and ensuring compliance with export obligations.
The government has established a direct connection between import approvals and export performance, creating a performance-based system for gold import authorizations. According to the DGFT notification, any subsequent Advance Authorisation for gold imports will only be considered for issuance upon fulfillment of at least 50% of the export obligation prescribed under preceding Advance Authorisations for gold. This requirement ensures that import permissions are tied to actual export performance, promoting balanced trade in the gems and jewellery sector. The Advance Authorisation scheme covers duty-free import of inputs, packaging material, fuel, oil, and catalyst that are consumed or utilised in the production of export products.
The new regulations introduce comprehensive monitoring mechanisms to prevent potential misuse of the duty-free import facility. As per ETGovernment, 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. Additionally, the concerned regional authority of the directorate will submit a monthly report to the DGFT containing details regarding the issuance of AA. Sources indicate that these measures are crucial as there was a high probability that the scheme may be misused to import large quantities immediately and take advantage of price arbitrage. The combination of quantity caps, enhanced compliance checks, and mandatory reporting creates a more structured framework for gold import approvals.
