Concerned over decline in gold exports from SEZs following ban on its trading, the government has allowed units in these zones to export gold items after a minimum value addition of 3 per cent.
"Commerce Ministry in a notification on April 26 has put a stop to gold trading in SEZs with effect from May 1. We have now made it mandatory that even in SEZ, gold units shall comply with the...minimum value addition of 3 per cent in gold jewellery and 5 per cent in gold and precious stone studded jewellery," Commerce Secretary S R Rao said.
Earlier, this provision was there for gold units outside the zones. Rao said that the step would help in boosting jewellery exports from India. Gold exports from SEZs in May declined by about $0.8 billion.
"Anybody who is exporting gold jewellery has to abide by this value addition norms. Prior to May 1, this norm was not applicable for SEZ exporters. So this has now been made applicable. Now it is mandated," he said.
The government had banned trading of gold by units in the SEZs to check misuse of tax benefits by them. SEZs are allowed duty-free imports. Reacting on the move, Gems and Jewellery Export Promotion Council Chairman Vipul Shah said the step would benefit genuine jewellery exporters.
Rao said: "Gold exports itself have taken a hit of $0.8 billion which essentially contributed to the gold trading that used to take place through SEZ." Director General of Foreign Trade (DGFT) Anup Pujari said that prior to May 1, the value addition norm were not applicable for SEZ exports so this has been now made applicable.
"...earlier if somebody exported gold items from SEZ, he was not mandated to follow a minimum value addition norm," Pujari said. An official said that the Commerce Ministry has taken this step of its own to help genuine jewellery exporters.
"The Commerce Ministry had received lot of complaints about diversion of gold from few zones to the domestic markets. The decision would now help in checking the misuse," the official said.
According to sources, SEZ units were earning arbitrage profits of as high as 7.5 per cent by diverting imported gold to the domestic market. This was a very profitable venture for SEZ units as it did not involve much capital, infrastructure or labour.
India is the largest consumer of gold. High gold imports are one of main reasons behind high Current Account Deficit, which touched a record high of 6.7 per cent of GDP in December quarter of last fiscal.
The monthly gold imports have averaged 152 tonnes in the first two months of this fiscal, as compared to an average of 70 tonnes seen in the 2012-13 financial year.