Govt allows exports of gold items from SEZs

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SME Times News Bureau | 18 Jun, 2013
In order to boost jewellery exports from SEZs following ban on its trading, the government has allowed units in these zones to export gold items after a minimum value addition of 3 percent, reports media.

"Commerce Ministry in a notification on April 26 has put a stop to gold trading in SEZs with effect from May 1. We have now made it mandatory that even in SEZ, gold units shall comply with the...minimum value addition of 3 percent in gold jewellery and 5 percent in gold and precious stone studded jewellery," Commerce Secretary S R Rao said in New Delhi on Monday.

Earlier, this provision was there for gold units outside the zones.

Rao said that the step would help in boosting jewellery exports from India. Gold exports from SEZs in May declined by about USD 0.8 billion.

"Anybody who is exporting gold jewellery has to abide by this value addition norms. Prior to May 1, this norm was not applicable for SEZ exporters. So this has now been made applicable. Now its is mandated," he said.

The government had banned trading of gold by units in the SEZs to check misuse of tax benefits by them. SEZs are allowed duty-free imports.

Rao said, "Gold exports itself have taken a hit of USD 0.8 billion which essentially contributed to the gold trading that used to take place through SEZ."

Director General of Foreign Trade (DGFT) Anup Pujari said that prior to 1st May the value addition norm were not applicable for SEZ exports so this has been now made applicable.

"...earlier if somebody exported gold items from SEZ, he was not mandated to follow a minimum value addition norm," Pujari said on Monday.

This was a very profitable venture for SEZ units as it did not involve much capital, infrastructure or labour.

India is the largest consumer of gold. High gold imports are one of main reasons behind high Current Account Deficit, which touched a record high of 6.7 percent of GDP in December quarter of last fiscal.

The monthly gold imports have averaged 152 tonnes in the first two months of this fiscal, as compared to an average of 70 tonnes seen in the 2012-13 financial year, report added.