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A spurt in the import of gold from Indonesia and an increase in import duty on crude palm oil by India are likely to be the key topics of discussion when Commerce & Industry Minister Suresh Prabhu meets his Indonesian counterpart Enggartiasto Lukita here on Monday.
“India is worried about the sharp increase in gold imports from Indonesia over the past two-and-a-half months following the implementation of the Goods & Services Tax (GST) regime, and is considering possible curbs. Indonesia, however, would not want its free trade agreement (FTA) with India to be tampered with. A solution to the problem may be discussed by the two Ministers,” a government official told BusinessLine .
Import of gold at nil customs duties from India’s FTA partner countries (a customs duty of 10 per cent is imposed on other countries), primarily South Korea and Indonesia, turned into a big problem for India from July, when the 12.5 per cent excise duty imposed on imports was replaced with a 3 per cent GST.
New Delhi was forced to impose import restrictions on South Korea despite the FTA as it could show that most of the gold coming in from that country was actually originating from Dubai, which is not allowed under an FTA.
However, curbing imports from Indonesia will be difficult, as the country mines its own gold. “With a steep increase in gold import from Indonesia, there is an urgent need to take some action. The two countries could discuss the matter and reach an amicable solution,” the official said.
Indonesia is also concerned about India’s decision to double the import duty on crude palm oil to 15 per cent from 7.5 per cent earlier this year. Crude palm oil is its primary export to India. Lukita had raised the matter last month with Union Minister for Processed Food, Harsimrat Kaur Badal, asking for a re-look.
“We expect the Indonesian Minister to press for a lowering of duty on import of crude palm oil. However, it may be difficult to give him any definite assurance,” the official said.
Other areas that may be touched upon by the two Ministers include the ongoing negotiations on the Regional Comprehensive Economic Partnership, which is moving towards conclusion, and the WTO ministerial meet in Buenos Aires in December.
“India and Indonesia have common interests at the WTO as both want to protect the interests of their vulnerable farming community by continuing to fund public procurement programmes,” the official said.
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