In the name of provisions of free trade agreement, no violation happens and to check this, the incoming consignments of gold from South Korea will be checked stringently by the customs, said by a senior official.
Last week this issue was discussed and the decision of stringent checking has come out as a result of it at a meeting of the department of commerce, customs authorities, officials of economic affairs and the Reserve Bank.
Under the FTA (free trade agreement) signed in January 2010, there is a sudden hike in gold imports from South Korea and the center was distressed by this. Between July 1st and August 3rd, the imports of the yellow metal from South Korea surged to USD 338.6 million. During July 1 and August 3 this year, the gold import jumped to USD 338.6 million from South Korea. Only worth USD 70.46 million is the whole year import in FY FY 2016-17.
The gold that imported under FTA from South Korea will now be more stringently checked, said by the officials of Customs department. On basis of self-assessment, the consignments were ear cleared and now as per need provisional assessment may also be done and bank guarantee may be asked from importers as well.
The import may reduce by the stringent checking and ask for bank guarantees as importers will not like their capital to be blocked, said by the customs officials. To change the provisions in FTA related to value added products, the customs department has requested the Commerce department also.
In this FTA the value addition requirement is less than in agreements with other countries, said by Customs and so needs to be re-looked. No one will able to take unnecessary advantage of it if this value addition clause is amended. As per jewelry industry, these rising imports have reduced the domestic price of the yellow metal.
The basic customs duty on gold is removed as per the FTA between India and South Korea. 12.5% countervailing import duty has been added to GST on the top of that. Under the integrated GST, the gold imports accordingly attract only 3%.
After China, the second largest consumer of gold in the world is India.