Thailand, on Wednesday, proposed that exporters from that country and importers from India could forego the duty benefit under the Indo-Thailand free trade agreement (FTA) and pay full duty to allow unhindered movement of yellow metal.
Worried over the restrictions on import of gold jewellery by India from Thailand, the Thailand Deputy Prime Minister and Minister for Commerce, Niwattumrong Boonsongpaisan, discussed the issue with the Commerce and Industry Minister, Anand Sharma, here.
“We have proposed that exporters from Thailand and also importers in India agree that they will pay tax on the gold (including gold jewellery) and things like that,” Mr. Niwattumrong told reporters after the meeting.
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In March, the Commerce and Industry Ministry had advised the Revenue Department to suspend preferential import of gold jewellery from Thailand. This suggestion came in the wake of doubts raised over the accuracy of information given on the Certificates of Origin issued by Thailand under the Early Harvest Scheme (a kind of free trade agreement).
Mr. Niwattumrong said that Thailand’s exports of gold to India were only 3 per cent of total imports of India. “This is a private sector agreement. The FTA is still there. But in practice exporters and importers agree so that we solve the problem,” he added.
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The FTA with Thailand allows gold jewellery imports at a concessional customs duty of 1 per cent. This concessional rate makes gold imports attractive, especially when considering that the duty for importing standard gold bars, gold coins and non-standard gold stand at up to 10 per cent. The Department of Revenue Intelligence (DRI) had alleged that some traders were bypassing rules of origin norms to import gold under the FTA with Thailand.
Under the rules of origin norms, a trader can import gold from Thailand if the value addition is 20 per cent. If strictly followed, sources said, the import of gold jewellery from Thailand should become less attractive as prices of gold in India and Thailand were the same. India, a big consumer of gold, has imposed restrictions on gold import due to rising current account deficit.
In April-December 2012, gold imports stood at $38 billion, as against $56.5 billion in the whole of 2011-12 fiscal.
Two-way commerce
Earlier, Mr. Sharma said trade between India and the four Southeast Asian nations was well below potential. The two-way commerce between India and these nations stood at $8.5 billion in 2012-13. “We need to do more. We have to look at not only increasing economic relation but deepening and diversifying the priority sectors which hold potential like IT, agri, healthcare, oil and gas and textile,” he added.