Blanket curbs on gold, silver, platinum articles to check duty arbitrage

The government on Thursday imposed sweeping import curbs on all forms of articles of gold, silver and platinum, in a move aimed at checking the misuse of free trade agreements (FTAs) and plugging tariff leakages.

The restrictions will apply with immediate effect, irrespective of prior contracts, irrevocable letters of credit, advance payments or shipment status, according to a notification issued by the Directorate General of Foreign Trade (DGFT). It also clarified that no transitional arrangements will be allowed.

“The Import Policy and Policy Condition of items covered under Chapter 71 is revised with immediate effect,” the notification said. The chapter includes pearls, precious and semi-precious stones, precious metals and their articles, imitation jewellery and coins.

The latest move expands on the government’s April 1 decision to curb imports of gold, silver and platinum jewellery, effectively bringing all such items under tighter scrutiny.

The decision reflects a shift from selective restrictions to a comprehensive clampdown on systemic misuse of FTAs, particularly the pact with the ASEAN bloc, in force since 2010. Officials and industry sources indicate that some traders were routing imports through countries like Thailand to exploit duty differentials, often declaring them as low-value or unstudded jewellery.

By eliminating grandfathering provisions, the government has signalled urgency and a zero-tolerance stance on tariff arbitrage. The move also fits into a broader macro strategy to rein in non-essential imports and manage the trade deficit, with gold imports being a major contributor.

However, the absence of transitional relief could disrupt legitimate businesses. Industry representatives have urged the government to simplify the licensing process to ensure genuine players are not adversely affected.

The curbs follow earlier, time-bound restrictions on silver and platinum jewellery, suggesting that piecemeal measures had limited impact, prompting a more sweeping policy response.