Gold Import in India
- November 23, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Gold Import in India
Subject: Economy
Section: External Sector
Amendments to Gold Import Policy: Boosting India-UAE Trade
- Policy Adjustment:
- The Centre has made amendments to the gold import policy to enhance trade between India and the UAE.
- Specific Changes by DGFT:
- The Directorate General of Foreign Trade (DGFT) has granted permission for gold import through India International Bullion Exchange IFSC Ltd (IIBX).
- Import can be done at a concessional duty rate under the Tariff Rate Quota (TRQ) provisions of the India-UAE Comprehensive Economic Partnership Agreement (CEPA).
- CEPA Implementation:
- The CEPA between India and the UAE came into effect in May 2022.
- Operational Details:
- Valid India-UAE TRQ holders, as notified by the International Financial Services Centres Authority (IFSCA), can import gold through IIBX.
- Physical delivery of the imported gold can be obtained through IFSCA registered vaults located in Special Economic Zones (SEZs).
- This move is in line with the guidelines prescribed by IFSCA.
- Facilitating Trade:
- It is expected to benefit the Indian jewelry industry by reducing transaction costs and improving the ease of doing business.
- Potential Market Growth:
- The Chairman anticipates that this policy change will contribute to creating a vibrant gold market in India.
- Furthermore, it is expected to boost the exports of value-added jewelry products.
- Government and IFSCA Efforts Appreciated:
- Appreciates the efforts of the Government of India and the IFSCA in implementing this progressive policy measure.
- CEPA Duty Concession:
- Under the India-UAE CEPA, domestic importers are entitled to a one percent duty concession on a specified quantity of gold under the TRQ provisions of the pact.
About World Gold Council (WGC)
The World Gold Council (WGC) serves as the market development organization for the global gold industry.
- Mission and Scope:
- The WGC operates as the market development organization for the gold industry, covering various aspects from gold mining to investment.
- Stimulating and Sustaining Demand:
- Its primary goal is to stimulate and sustain demand for gold, working across all segments of the industry.
- Membership:
- The WGC is an association whose members include some of the world’s leading gold mining companies.
- Responsible Mining Advocacy:
- It actively supports its members in adopting responsible mining practices.
- The WGC has played a role in developing the Conflict-Free Gold Standard, emphasizing ethical and sustainable mining practices.
- Conflict-Free Gold Standard:
- The Conflict-Free Gold Standard is a set of guidelines designed to ensure that gold mining activities do not contribute to conflict, human rights abuses, or environmental degradation.
- Global Presence:
- The World Gold Council is headquartered in the United Kingdom.
- It has a global presence with offices in key regions, including India, China, Singapore, Japan, and the United States.
About Directorate General of Foreign Trade (DGFT)
The Directorate General of Foreign Trade (DGFT) is a government agency in India that operates under the Ministry of Commerce and Industry. It plays a crucial role in the formulation and implementation of foreign trade policies.
- Policy Formulation:
- DGFT is responsible for formulating and implementing the foreign trade policy of India.
- Trade Facilitation:
- It works to facilitate and promote India’s international trade.
- Licensing and Regulation:
- DGFT issues and regulates various licenses and authorizations related to foreign trade.
- Export Promotion:
- The organization is involved in promoting exports and creating a conducive environment for exporters.
- Import Regulation:
- DGFT regulates and controls imports to ensure that they comply with various trade policies and regulations.
- Tariff and Trade Agreements:
- It is involved in matters related to tariffs and trade agreements.
- Customs and Trade Facilitation:
- DGFT collaborates with customs authorities and other agencies to streamline and facilitate trade processes.
- Economic Zones and Export Processing Zones:
- It plays a role in the establishment and regulation of Special Economic Zones (SEZs) and Export Processing Zones (EPZs).
- Online Services:
- DGFT provides online services for various trade-related activities, including the issuance of licenses and permits.
- Promotion of E-commerce in Exports:
- With the growing importance of e-commerce in international trade, DGFT works towards promoting and regulating e-commerce activities related to exports.
About Comprehensive Economic Partnership Agreement (CEPA)
A Comprehensive Economic Partnership Agreement (CEPA) is a type of trade agreement between two or more countries that aims to facilitate comprehensive economic cooperation. These agreements go beyond traditional free trade agreements by not only reducing or eliminating tariffs on goods but also addressing various other aspects of economic collaboration.
About Tariff Rate Quota (TRQ)
Tariff Rate Quota (TRQ) is a trade policy tool that combines elements of both protectionism and liberalization. It involves a two-tiered tariff system designed to manage imports of a specific commodity within a predetermined quantity.
In summary, a Tariff Rate Quota is a trade policy mechanism that allows a certain quantity of a commodity to be imported at a lower tariff rate, while imports beyond that quantity face a higher tariff.
This tool enables countries to manage trade in specific sectors, providing a degree of protection to domestic industries while allowing for controlled international market access.
About India International Bullion Exchange IFSC Limited (IIBX)
India International Bullion Exchange IFSC Limited (IIBX) is a significant development in India’s financial landscape, particularly in the domain of bullion trading.
- Launch and Inauguration:
- IIBX was inaugurated by the Honourable Prime Minister of India, Shri Narendra Modi, on July 29, 2022.
- Promoters:
- IIBX is promoted by leading market infrastructure institutions in India, including NSE, INDIA INX (a subsidiary of BSE), NSDL, CDSL, and MCX.
- Location:
- It is established at the Gujarat International Finance Tec-City (GIFT City), which is an International Financial Services Centre (IFSC) in Gandhinagar, Gujarat.
- Regulation:
- IIBX is regulated by the International Financial Services Centres Authority (IFSCA).
- Objective:
- The primary objective of IIBX is to provide a platform for importing bullion into India and to create a world-class bullion exchange ecosystem. This includes facilitating bullion trading, promoting investment in bullion financial products, and offering vaulting facilities within IFSCs.
- Direct Import for Indian Jewellers:
- For the first time, Indian resident jewellers (Qualified Jewellers – QJ) have the opportunity to import bullion directly into India through IIBX by being a Client or a Limited Purpose Trading Member.
- Bullion Trading Mechanism:
- Bullion traded on IIBX is kept in vaults authorized by IFSCA and empanelled by India International Depository IFSC Limited (IIDI). Trading is done in the form of Bullion Depository Receipts (BDRs), and a Demat account with IIDI is required for this purpose.
About International Financial Services Centres Authority (IFSCA)
The International Financial Services Centres Authority (IFSCA) was established on April 27, 2020, under the International Financial Services Centres Authority Act, 2019.
- Establishment Date:
- IFSCA was established on April 27, 2020.
- Legislation:
- It was established under the International Financial Services Centres Authority Act, 2019.
- Headquarters:
- IFSCA is headquartered at GIFT City, Gandhinagar, Gujarat.
- Unified Authority:
- IFSCA serves as a unified authority for the development and regulation of financial products, financial services, and financial institutions in the International Financial Services Centre (IFSC) in India.
- GIFT IFSC:
- The GIFT IFSC (Gujarat International Finance Tec-City International Financial Services Centre) is the maiden international financial services centre in India.
- Previous Regulatory Framework:
- Before the establishment of IFSCA, domestic financial regulators such as RBI (Reserve Bank of India), SEBI (Securities and Exchange Board of India), PFRDA (Pension Fund Regulatory and Development Authority), and IRDAI (Insurance Regulatory and Development Authority of India) regulated business activities in IFSC.
- Inter-Regulatory Coordination:
- Given the dynamic nature of business in IFSCs and the need for coordination within the financial sector, IFSCA was established as a unified regulator with a holistic vision.
- Global Connectivity:
- IFSCA aims to develop a strong global connect and focus on the needs of the Indian economy. It also serves as an international financial platform for the entire region and the global economy.
- Promoting Ease of Doing Business:
- One of the main objectives of IFSCA is to create a regulatory environment that facilitates ease of doing business in IFSC.