To restrict all forms of gold imports from the country South Korea has objected to India’s move, saying India should have discussed the issue first instead of unilaterally taking the decision as it is not compliant with the norms.
In Seoul later this week, between the two countries, the objection comes ahead of a high level meeting of the trade ministers to review the India-South Korea free trade agreement. As South Korea does not produce gold, on its part, India has reasoned that the move is justified but was being used only to circumvent import duty on the metal.
On August 25, from South Korea India had put all forms of gold import in the restricted category wherein from the government, importers will need permission before importing them.
Saying the move is not compliant with norms, they have raised objections, reported by one official privy to the details. Between July 1 and August 21, more than $1 billion worth of gold imports from South Korea, decided by India of a clampdown came in the wake.
The Comprehensive Economic Partnership Agreement (CEPA) is known as India’s FTA with South Korea, under which the 10 percent basic customs duty on gold has been eliminated. Under the goods and services tax (GST), by a 3 percent integrated GST the 12.5 per cent countervailing duty on gold imports was replaced.
Hence, gold imports from a country with which India does not have a trade pact attract a 10 percent BCD and a 3 percent GST as per the present norms while those from the FTA channel have to pay only the 3 per cent GST.
Via treaty countries, this makes imports attractive. India could have discussed the issue during the review of the CEPA, which is scheduled for later this week complained by South Korea said by another official which is aware of the development.