NEW DELHI: A day after hiking customs duty on gold, the government on Wednesday put limits on the quantity of yellow metal that can be imported under a key export scheme. Capping gold imports under the Advance Authorisation (AA) Scheme at 100 kilograms, coupled with tighter compliance and monitoring, aims to curb potential misuse of the export scheme after a higher import tariff increased arbitrage opportunities.
Earlier, exporters could import unlimited amounts of gold under the scheme without the payment of duty, for processing and re-export. The duty-free import only puts an obligation for export within a defined timeframe.
On Wednesday a Public Notice by Directorate General of Foreign Trade (DGFT) stated: “There is a high probability that the AA Scheme may be misused to import large quantities (of gold) immediately and take price arbitrage. In order to prevent any possibility of misuse of AA Scheme the fresh directions have been issued,” sources said.
The DGFT said that in case of application for AA by a first time applicant, mandatory physical inspection of the applicant’s manufacturing facility shall be undertaken by the regional authority concerned to verify the existence, capacity and operational status of the manufacturing facility. Any subsequent AA for the import of gold will be considered only up after fulfillment of 50% of export obligation.The AA holder will also have to submit a fortnightly performance report to facilitate effective oversight and compliance monitoring.
The Regional Authority shall submit a monthly consolidated report to DGFT Headquarters containing details regarding the issuance of AA and corresponding export/import transactions of gold to enable centralised monitoring and policy oversight.
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On Wednesday the government announced an increase in basic customs duties on gold to 10% from 5% and raised the Agriculture Infrastructure and Development Cess to 5% from 1%, a move intended to curb forex outflow due to the surge in imports of the yellow metal. Similar duty hikes were announced for silver and platinum imports as well.
This resulted in a hike in taxes on gold imports to 15% from 6%. Gold imports also attract 3% Integrated Goods and Services Tax (IGST).
The announcements came after Prime Minister Narendra Modi asked citizens not to buy gold for one year to conserve foreign exchange in view of the ongoing war in West Asia and its impact on the economy.
Despite high international prices of gold, India imported $ 71.97 billion worth of yellow metal in 2025-26, which was 24% more than pervious year, even as volume of imports shrank.
Source: The Financial Express
