New Delhi: The Indian government has imposed restrictions on gold jewellery imports from all countries except the United Arab Emirates (UAE), according to a notification from the Director General of Foreign Trade (DGFT).
The notification, dated June 11, changes the status of imported jewellery from “free” to “restricted”. This order does not apply to the UAE due to India’s Comprehensive Economic Partnership Agreement (CEPA) with the Middle Eastern nation.
As a result, gold jewellery imports from all other countries will now face a 15% import duty, making these items more expensive for Indian consumers. This move is expected to benefit domestic jewellery manufacturers and give an advantage to UAE-based exporters selling gold jewellery in India.
Reason for Restriction
The DGFT notification did not specify the reason for the decision, but experts suggest it aims to reduce the trade deficit. In July of the previous year, India had relaxed gold jewellery import rules for countries with which it has Free Trade Agreements (FTAs). This led to a surge in imports from countries like Indonesia and Tanzania, causing market distortions.
India’s gold imports increased by 30% in the fiscal year 2023-24, reaching $45.54 billion, driven by strong domestic demand, mainly from the jewellery sector.
In April 2024, India’s trade deficit widened to $19.1 billion, the highest in over five months, reflecting the gap between merchandise imports and exports.