India has banned the export of gold products with purity above 22 carats with immediate effect, a move that the industry sees as a way of curbing irregularities in the trade.
A notice was issued by the director general of foreign trade limiting shipments of jewelry, coins, and medallions to 22 carats or below, without giving a reason.
“The move may be to reduce round-tripping of jewelry and coins, wherein a trader can import the gold coins or jewelry at a lower import tax because of trade agreements with some countries and re-export the same stock without any value addition,” said Ketan Shroff, joint secretary of the India Bullion and Jewellers Association Ltd.
The exporters would benefit from not paying the 10 percent import tax currently levied on most inbound shipments of gold, he said.
Indian imports are said to have more than doubled last month from a year ago partly due to a jump in purchases from South Korea, with which India has a free-trade agreement. Importers have previously used free-trade treaties with countries such as Thailand and Indonesia to escape the import duty.
Gold medallions and coins made up 15 percent of the country’s total gems and jewelry exports by value in the financial year ended March, according to data from the Gems & Jewellery Export Promotion Council. There were no data on how much of the exports were above 22 carats.