Thailand has agreed to pay import taxes on gold and gold jewellery being shipped to India. This puts an end to acrimony between the two countries over third country gold coming into India at concessional duties through Thailand under the bilateral free trade agreement.

“We had some special allowance under FTA that when we ship gold jewellery to India, there would be no tax in the past. But now we have agreed to pay duty. Exporters from Thailand and importers in India have agreed that now we will pay tax on gold, gold chains and things like that,” Thai Deputy Prime Minister and Minister for Commerce Niwattumrong Boonsongpaisan told Indian media on Wednesday.

Early this year, India had stopped concessional import of gold from Thailand under the early harvest scheme of the bilateral free trade agreement. India said that Thai exporters have to prove that the gold originates from there and is not being sourced from a third country before they could claim import duty concessions.

The Early Harvest Scheme signed by India and Thailand in 2004 allows import of gold jewellery at a concessional duty of one per cent against a regular duty of 15 per cent now applicable on all imports. Gold attracts an import duty of 10 per cent.

India had put in place very strong rules of origin in the Early Harvest Scheme with Thailand that allows import of 82 items including gold at concessional duties. Gold exporters have to do at least 20 per cent value addition before they could claim concessional market access.

The Finance Ministry has long been suspecting traders of bringing in cheaper gold from other South East Asian countries through Thailand to escape the steep import duties.

(This article was published on October 23, 2013)
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