24-Oct-2013
Thailand has offered to forego duty concessions on its gold jewellery exports to India under the bilateral free trade pact, worried that New Delhi may impose more restrictions. The issue was discussed during the meeting between commerce and industry minister Anand Sharma and Thai deputy PM and minister for commerce Niwattumrong Boonsongpaisan here on Wednesday.
“We have proposed that ... the exporters from Thailand and also importers in India agree that now we will pay tax on the gold (including gold jewellery) and things like that,” Niwattumrong told reporters after the meeting.
In March, the commerce and industry ministry had advised the revenue department to suspend preferential import of gold jewellery from Thailand.
The directorate of revenue intelligence, after raiding several jewellers in the country, had raised an alarm about traders misusing rules of origin certificate to import jewellery from third countries through Thailand.
The rules of origin norms under the trade agreement mandate a 20% value addition in Thailand for a product to be eligible for concessional regime. Since, gold prices are nearly the same in India and Thailand, the value addition norm would make the exports unattractive.
But, importing from a third country where gold prices are low makes it an attractive proposition to route the purchases through Thailand. The Early Harvest Programme under the India-Thai FTA allows gold jewellery imports at a concessional Customs duty of 1%. Importing jewellery from Thailand became very lucrative after the government raised duty on jewellery imports in phases to 15%.
Niwattumrong said Thailand’s export of gold to India is only 3% of total imports of India, adding that rest of the things in the scheme would not be changed. “This is a private sector agreement.
The FTA is still there” he added. India has imposed restrictions on gold import due to rising current account deficit that stood at 4.8% of the GDP in 2012-2013.
Source:- economictimes.indiatimes.com
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