Tightening the Rules on Gold and Silver Imports
The Indian government, through the Directorate General of Foreign Trade (DGFT), has implemented stricter regulations on the import of precious metals namely gold and silver in unwrought, semi‑manufactured, and powdered forms. Effective immediately, only specified entities such as RBI‑nominated agencies, qualified jewellers registered with the International Financial Services Centres Authority (IFSCA) via the India International Bullion Exchange (IIBX), or authorised tariff‑rate quota (TRQ) holders under the India‑UAE CEPA can import these metals. These changes follow the Finance Act 2025 and aim to bring greater control to precious metal imports while addressing growing misuse of trade agreements.
New HS Codes to Close Misclassification Loopholes
A pivotal element of the update is the introduction of new Harmonised System (HS) codes. Categories such as gold dore, silver dore, and high‑purity platinum have been redefined to prevent ambiguous classifications. Legacy HS codes like 71081200 and 71081300 have been removed, while highly purified metals 99.5% gold and 99.9% silver now fall under the “Restricted” category, curbing easy import access.
Plugging the Dubai Misuse via CEPA
The rules are a direct response to exploitation of India‑UAE CEPA concessions. Some importers were disguising nearly pure gold as platinum alloy containing just 2% platinum to exploit reduced or zero‑duty imports under CEPA. Adding to the assault on that loophole, only platinum alloys with 99% or more purity are now freely importable; anything else requires DGFT authorisation.
Customs Duty Increase to Curtail Alloys
In July 2024, the government pre-emptively hiked customs duty on gold‑alloy imports under CEPA. The duty rose from 0.5% to 3.6%, while the Agriculture Infrastructure and Development Cess (AIDC) was introduced at 1.4%, making the cost of mis‑labelled imports economically unviable.
Streamlining Through the India International Bullion Exchange
By restricting import channels to IIBX and RBI‑approved bodies, the government aims to formalise and track trade routes. Gold dore and other semi‑processed gold forms continue to be importable, under licence and actual user agreements, through licensed refineries. This structured system enhances traceability while ensuring the quality of bullion entering the domestic market.
Strengthening Trade Oversight and Transparency
Expert commentary, including from the Global Trade Research Initiative (GTRI), highlights the significance of synchronising HS codes with customs duties, a measure designed to plug e.g. gold‑as‑platinum disguises under CEPA. ET reports echo this, praising the DGFT’s alignment of Schedule‑ITC (HS) 2022 classifications with Budget 2025 tariff regulations.
Repercussions for Dubai’s Bullion Industry
Dubai, a major conduit for gold to India, saw gold imports from the UAE triple from USD 3.5 billion in FY23 to USD 10.7 billion in FY24 even as overall UAE imports into India declined. With new regulations, Dubai’s gold market may face reduced inflows, pushing traders to adapt by selling through compliant channels like IIBX or pivot to alternate markets.
Impact on Domestic Bullion Industry and Jewellery Makers
The clampdown is poised to correct price distortions caused by grey‑market inflows. Unscrupulous suppliers who undercut local jewellers by evading duties will now find their margins reduced. Meanwhile, licensed players operating within authorised frameworks may benefit from improved transparency and stable domestic bullion prices.
Investor and Consumer Implications
With the rise of authorised import routes and upgraded HS codes, investors and jewellers can expect greater transparency and predictability. The centralised import framework supports better market regulation, while normal investors won’t see sudden policy swings in bullion availability or purity standards.
Challenges Ahead
Implementing these changes will require robust oversight by agencies such as DGFT, customs, RBI, and IFSCA. Vigilance will be needed to prevent new evasions like identifying low‑purity platinum alloys or other misclassifications. Compliance among nominating bodies and bullion players is critical for the system’s success.
Final Takeaway
The revamped import framework anchored in new HS codes, stricter purity standards, elevated duties, and channel restrictions aims to ensure that precious metal imports are traceable, compliant, and fairly taxed. By curbing misuse of free‑trade agreements, the government seeks to restore market equilibrium, protect revenue, and align imports with international norms. Domestic jewellers and investors stand to benefit from a cleaner market landscape, even as implementation challenges lie ahead.
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