In India 24-carat gold is used mostly in coins and bars
In a move that could help control the round-tripping of gold and misuse of bank funds meant for exports, the government is considering banning the export of 24-carat jewellery.
In India 24-carat gold is used mostly in coins and bars. Globally too, except China, 24-carat jewellery is not in use.
But certain export houses in India export 24-carat jewellery, in which hardly any value addition is done except refining and casting gold in jewellery form. It is then sent to Gulf countries and re-imported in the form of gold.
These export houses, though they are handful in number, use this route to show high exports, thus keeping their export house status intact, and use low-cost bank credit meant for them.
The finance ministry is, however, concerned at this.
Such round tripping had once been estimated at more than 100 tonnes, and jewellery exports as a proportion of gems and jewellery exports are not much.
But being pure in gold jewellery without the use of precious stones, this has a sizable stake.
A gold survey by GFMS Thomson Reuters says: “In 2016 the import of duty-free gold, which was destined for manufacturing jewellery and medallions for exporting, declined by 15 per cent to 167.3 tonnes from 196.2 tonnes in 2015. Of this we estimate 125 tonnes were used for round tripping and 38 tonnes for exports during 2016.”
An industry source said that genuine exporters would not be impacted if the government banned the export.
Even the Gems and Jewellery Export Promotion Council had drawn the attention of the finance ministry to this, asking it to find out how much value addition was happening in such exports. The council thinks exports appear inflated.
Photograph: Sailesh Andrade/Reuters
'Farmers are disillusioned with Modi'
Why home loans are set to get cheaper
GST: Promise and reality
Dilip Shangvi down Rs 90,840 crores in two years!