India implements import restrictions on gold jewellery

The central government implemented measures to limit the importation of specific gold jewellery and articles in response to the growing trade deficit.

Image Credit: Pixabay

In response to the increasing trade deficit, the central government implemented restrictions on the import of specific gold jewellery and articles on Wednesday. According to a notification from the Directorate General of Foreign Trade (DGFT), importers will now be required to obtain government permission or a license for importing gold products.

In May, the trade deficit reached its highest level in five months due to a 10% decrease in exports caused by a decline in demand from Western nations. However, the DGFT stated that the imposed restrictions on imports will not apply to imports under the India-UAE free trade agreement.

During the April-May period of this fiscal year, imports of pearls, precious, and semi-precious stones experienced a decline of 25.36%, amounting to approximately US$ 4 billion. Similarly, gold imports contracted by around 40%, totalling US$ 4.7 billion during the same period.

From April to May of this fiscal year, the total value of merchandise imports decreased by 10.24% to US$ 107 billion. During the same period, the merchandise trade deficit amounted to US$ 37.26 billion, which was lower compared to the US$ 40.48 billion deficit recorded in April-May 2022.

Importers have been taking advantage of a policy loophole in recent months, enabling them to procure plain gold jewellery from Indonesia without fulfilling the requirement of paying any import taxes.