India tightens platinum jewellery imports to curb duty evasion and protect domestic market

India has recently taken decisive action to tighten its control over the precious metals trade and mitigate revenue leakages by imposing import restrictions on certain categories of platinum jewellery. This strategic move, announced through a notification from the Directorate General of Foreign Trade, places un-studded platinum jewellery under the "restricted" import category until April of next year. Consequently, importers are now mandated to obtain government authorization for bringing in these items, a significant shift from their previous status as freely allowed imports.

The imposition of these new curbs on un-studded platinum jewellery is not an isolated incident but rather part of a broader governmental effort. It follows a similar measure taken earlier to restrict imports of plain silver jewellery until March of next year, indicating a concerted strategy to regulate the precious metals sector. These restrictions aim to create a more controlled and transparent import environment, ensuring compliance and safeguarding domestic interests within the vast Indian market.

These regulatory adjustments arrive at a challenging time for India's broader gems and jewellery sector. The industry is currently contending with the twin pressures of subdued global demand and persistently rising precious metals prices. This difficult environment has significantly impacted export performance, with gross exports in October experiencing a sharp decline of over 30% year-on-year, totaling $2.17 billion, according to data released by the Gem and Jewellery Export Promotion Council.

The primary catalyst for these import restrictions stems from persistent complaints lodged by various industry groups regarding traders exploiting loopholes within the existing import mechanism. The government’s objective is to effectively close these trade irregularities, which have the potential to result in lower import bills and unmonitored trade flows. Given that India is a significant net importer of gold, any changes in the flow and pricing of the yellow metal, or items often miscategorized to bypass duties, can have a substantial impact on the nation's overall trade balance.

Surendra Mehta, National Secretary of the India Bullion and Jewellers Association, highlighted a specific concern driving the new policy. He explained that recent trends have shown traders importing what is labeled as "platinum jewellery" but which contains approximately 90% gold, leveraging Free Trade Agreement (FTA) routes to achieve zero-duty imports. This practice has not only circumvented standard import duties but has also unfairly disadvantaged genuine domestic jewellers who operate under a different regulatory and cost structure, prompting the government to intervene to ensure a level playing field.