Exporting gold jewellery above 22 carat banned as govt responds to complaints

By

Isabelle Crossley

Published
Aug 16, 2017

On August 14, the Indian government issued a ban on the export of gold over 22 carat that extends to domestic tariff areas (DTAs) following complaints from various industry associations.

Both the Gem and Jewellery Export Promotion Council (GJEPC) and the Association of Gold Refineries and Mints (AGRM), among other trade bodies, issued complaints to the Indian government that gold export regulations were being misused. The export of over 22 carat gold was previously banned from Special Economic Zones (SEZs) but they felt that this was not enough and on Monday, the government heeded their advice and extended the ban to DTAs. The aim of this ban is to put an end to “round tripping”.

A current problem in the gold and jewellery market is the practice whereby gold is imported by traders to be made into jewellery and coins which is duty free. However, after the jewellery is made it is exported to places like the Middle East but it is then melted down again into a lower quality gold that is then imported again into India and only incurs 8.75 percent duty as opposed to the normal 10 percent on 24 carat bullion bars. After a complex web of operations, traders are able to profit from this “round tripping” of gold. However, it is believed that Monday’s ban will put an end to this practice.

K Srinivasan of the GJEPC said on the matter: “The ban on exports of jewellery and articles above 22 carat will check round tripping” and was confident that the government’s ban would be a success. Moreover, he went on to say: “Genuine exporters won't be affected as they route jewellery to Middle East and certain Far Eastern nations of between 18 and 22 carat purity.”