KOLKATA (miningweekly.com) – A sharp fall in gold imported into the country during the first quarter of the current financial year has prompted the Indian government to move toward an early lifting of the ban on importing the precious metal from South Korea.
With gold imports down 25% during the first quarter at $8.43-billion and the trend having started since January, the government is willing to accede to persistent lobbying from South Korea to lift the ban on inward shipment of gold originating from the latter country.
As reported by Mining Weekly Online, the South Korean government has been putting sustained pressures on India to lift the ban on zero duty imports of gold under the Comprehensive Economic Partnership Agreement (CEPA), imposed last year.
Sources said given the falling trend in gold imports, the Indian government has communicated to its counterparts in the South Korean government that India is preparing to revoke the ban in the shortest possible time.
However, India has not specified any timeframe for the lifting of such a ban as the Indian government will insist on including a regional value addition norm during the forthcoming bilateral meeting to review CEPA.
The Indian government has unofficially conveyed to South Korea that it would like to see a minimum threshold of value addition to gold within South Korea and necessary certification of the same, to prevent ‘third country gold’ flowing into India via South Korea.
India has suggested a minimum of 35% value addition to gold in South Korea for the consignment to be eligible to be imported from the latter.
In August, India banned gold imports from South Korea at nil rate of customs duty as with the introduction of the Goods and Services Tax (GST) in earlier months, reduced the incidence of local duty on gold fell sharply from 12.5% countervailing duty to an integrated rate of 3%.
The lower net effective incidence of all taxes triggered a surge in gold imports from South Korea during July to August 2017, to $338-million, against total imports of the metal from the country of $70-million during the entire previous financial year.
Indian policy makers rationalising the ban had said that since South Korea was neither a leading producer of the metal, nor did it have a significant value addition industry or jewellery making, the country was being used as a transit point for ‘third country’ gold to be shipped into India taking advantage of CEPA provisions for a nil rate of customs duty.