Move aimed at arresting spiralling current account deficit on burgeoning imports
Concerned about the rising current account deficit, the commerce ministry on Wednesday asked its finance counterpart to suspend imports of gold jewellery from Thailand.
Under the norms, which the commerce ministry wants to be notified, India will not allow import of gold jewellery from Thailand unless the certificate of origin issued by the Thai government “are verified to our satisfaction”.
The commerce department has asked its revenue counterpart to issue notification suspending the import of gold jewellery from Thailand, under the provisions of Early Harvest Scheme.
The import of gold jewellery from Thailand attracts a concessional duty of only 1% under the Early Harvest Scheme, which is a bilateral trade agreement.
However, India imposes 10% tax on imports from other countries.
According to estimates, the country’s gold jewellery imports from Thailand stood at $72.25 million from Thailand in 2011-12.
India’s total gold jewellery imports were $1.45 billion in 2011-12, with Dubai and Hong Kong among the lead exporters.
The current account deficit (CAD) was at 30-year record high of 4.2% of the GDP in 2011-12. CAD occurs when the country's total imports and transfers are higher than its total exports and transfers. High levels of CAD lead to a slew of problems, including deterioration in the currency and even the economy.
India is a big consumer of gold and the demand for gold is traditionally met through imports.