Worried about India imposing further restrictions on the import of gold jewellery, Thailand has agreed to pay import taxes on gold and gold jewellery being shipped to India. An acrimonious situation had developed between the two countries over gold coming into India at concessional duties through Thailand under the bilateral free trade agreement.
In order to curb gold imports further, the Indian government has hiked the duty on gold jewellery imports from Thailand to 15% from the prevailing 1%, on October 23. Officials said the import duty differential was needed to protect millions of artisans engaged in making jewellery across the country.
“India imports the maximum jewellery from Thailand. The government is trying to get a stranglehold on imports and contain the widening current account deficit. A decision to hike import duty to 15% was taken during ministerial level talks in Delhi on Tuesday,” said traders.
The Indian government had suspended imports of gold jewellery from Thailand, with sellers frequently bypassing India’s higher import duties. Ever since, Thailand has been keen to open the door to gold exports once again with India, and had constituted a committee of senior government officials and trade representatives to discuss the issue threadbare.
“In March, India’s commerce and industry ministry had advised the revenue department to suspend preferential import of gold jewellery from Thailand,” said Manish Kedia, bullion retailer.
On October 23, at a meeting between India’s Commerce and Industry Minister Anand Sharma and the Thai deputy Prime Minister and Minister for Commerce, Niwattumrong Boonsongpaisan, it was decided that exporters would forego the duty benefit under the Indo-Thailand free trade agreement and pay full duty.
Niwattumrong told mediapersons after the meeting that Thailand’s exports of gold to India was only 3% of the total imports of India. He added that it was a private sector agreement and only related to bullion and that the free trade agreement continued to be in existence between the two countries.
The earlier free trade agreement between India and Thailand ensured that gold exports from Thailand to India would attract just 1% in duties, but the precious metal has to have at least 20% in value addition in Thailand so as to be qualified as the place of origin.
However, doubts were raised over the accuracy of information given on the certificates of origin issued by Thailand under its `Early Harvest Scheme’, which is a kind of free trade agreement.
The concessional rates of the agreement also made gold imports attractive from Thailand, especially with the duty for importing standard gold bars, gold coins and non standard gold hiked to 10% in India.
Source: http://www.mineweb.com/mineweb/content/en/mineweb-gold-news?oid=210053&sn=Detail