The Indian Bullion and Jewellers Association (IBJA) wants the Director General of Foreign Trade (DGFT) to scrap the special gold import quota from the UAE under the comprehensive economic partnership agreement allotted to 78 applicants this year, and call for fresh applications from eligible players.
Some of the large gold importers told businessline they believe there was a likely ‘fixed-match’ or a ‘pre-arranged’ gold import quota allotment done and, hence, they are seeking a fresh process with transparency.
In March, the DGFT allotted an import quota of 140 tonnes of gold to 78 applicants with one per cent lesser import duty than the usual under the scheme known as Tariff Rate Quota (TRQ), a mechanism for import of a set quantity of specific products.
Tariff quotas are used on a wide range of products, but so far were mainly restricted to the agriculture sector. The scheme has also been extended for gold imports, and the DGFT decided the players to be considered for the quota in March.
The government has favoured gold imports from the UAE under the free trade agreement signed by charging an import duty of one percentage point less than the usual 12.5 per cent levied on imports from other destinations.
In a letter (a copy is in possession with businessline), dated April 21, written by the IBJA to DGFT, narrates a baffling incident to indicate the ‘pre-arranged’ quota deal.
The letter, which is addressed to Santosh Kumar Sarangi, Additional DG (DGFT), states that the quota for import of 140 tonnes of gold was allotted to the 78 applicants in a meeting of the DGFT held on March 23 based on reference of government public notice dated April 17.
“We fail to understand as to how in the meeting held on 23rd March was given based on reference to public notice no. 06/2023 dated 17/04/2023 issued by DGFT in sync with Ministry of finance (Department of Revenue) Notification No. 20/2023- Custom dated 31/03/2023,” said IBJA’s letter to DGFT Secretary Sarangi.
The IBJA letter says the government exchequer stands to lose ₹750 crore to ₹800 crore due to incorrect allotment of TRQ quota of 140 tonnes of gold for FY24 in terms of UAE-CEPA agreement with 1 per cent lesser import duty.
“As per the minutes of the meeting dated March 23 of DGFT, the TRQ quota for import of 140 tonnes of gold at one per cent lesser duty was allotted to 78 applicants. We request you cancel the so far allotted quota and give fresh opportunity to all eligible applicants. Approving such a proposal in the meeting in March based on future DGFT public notice issued in April itself is void,” the letter added. As evidence, the IBJA has attached the minutes of the meeting of DGFT held in March, where the quota was allotted based on the April circular.
The India-UAE free trade pact, which came into effect on 1 May, 2022, allowed for the concessional tariff on gold for up to 120 tonnes in the first year (80 tonnes till December).
Last July, the government hiked the basic customs duty on gold to 12.5 per cent. Along with the agriculture infrastructure development cess of 2.5 per cent, the effective gold customs duty works out to 15 per cent.
Gold imports in India were down 27 per cent last year to 673 tonnes, against 925 tonnes in 2021, due to high import duty even while smuggling of gold is on the steady rise.