New Import Restrictions on Gold and Silver in India
On Monday, India introduced significant restrictions on the importation of gold and silver in unwrought, semi-manufactured, and powdered forms. This policy shift permits imports exclusively via nominated agencies, qualified jewelers, and valid tariff rate quota holders under the India-UAE Comprehensive Economic Partnership Agreement (CEPA).
The Need for Regulatory Measures
The backdrop of this decision lies in the recent Budget FY26 announcement, which emphasized the necessity of introducing new Harmonised System (HS) codes for various precious metals. This includes gold dore, silver dore, and platinum containing at least 99% purity. Importers previously exploited loopholes in these classifications, notably by labeling 99% pure gold products as platinum alloys to benefit from lower tariffs guaranteed under the CEPA.
Addressing Misuse: The Introduction of New HS Codes
In response to this abuse of classification, the Indian government has now implemented a specific HS code for platinum that contains 99% or more pure platinum. This critical distinction ensures that only products meeting this high standard qualify for the associated duty benefits under the CEPA, effectively prohibiting imports of gold masquerading as platinum.
A government official elaborated, “This measure follows the budget announcement to create separate HS codes to ensure that gold imports don’t happen in the name of platinum.” This proactive step aligns customs duties with import regulations, enhancing the integrity of the trade system.
Tariff Rate Quota and Implications for Gold Imports
Under the India-UAE CEPA, India has agreed to a substantial import quota of up to 200 metric tonnes of gold annually, benefiting from a modest tariff concession of 1% under the tariff rate quota (TRQ) arrangement. This framework was designed to strengthen ties between the two nations while facilitating a controlled and regulated environment for the importation of precious metals.
The introduction of these restrictions aims not only to tighten the reins on illegal and unethical import practices but also to maintain the balance between economic growth and regulatory compliance.
The Impact on Jewelers and Market Practices
Qualified jewelers, who are now the primary authorized importers, may experience an initial adjustment period as they familiarize themselves with the new regulations. This shift aims to streamline the import process and curtail the informal channels that have historically led to discrepancies in the trade of precious metals.
Moreover, as the market adapts to these changes, consumers can expect a more transparent pricing mechanism, reflective of actual quality and compliance. The hope is that these efforts will promote fair competition and reduce the risk of substandard products entering the market.
Conclusion: A Regulatory Evolution
These new restrictions on gold and silver imports signify a pivotal moment in India’s regulatory landscape for precious metals. By closing loopholes and establishing clearer definitions within customs codes, India is taking steps to ensure that its import practices reflect both economic strategy and ethical considerations. As the market evolves in response to these changes, stakeholders in the jewelry industry and beyond will be closely monitoring effects on trade dynamics and market integrity.
