India imported 25 tons of gold in 7-8 or South Korea, due to the reduction of import taxes and fees
Foreign media news on August 14th, industry sources said that during the 7-8 months, India traders may import 25 tons of gold from South Korea, in order to make full use of the free 10% import tariff opportunities.
Tax incentives have led to pressure on India's domestic gold refiners and banks, which are unable to give consumers as much incentive as duty-free imports of gold.
India gold refining and Casting Association (Association of Gold Refineries and Mints) secretary general James Jose said: "the collection of goods and services tax (GST) since, India has imported from South Korea 12 tons of gold, is expected to the end of the month, imports will reach 25 tons."
India, the world's second largest gold consumer after China, has imposed a 10% tariff on imported gold, but the legislation does not apply to countries such as South Korea that have signed free trade agreements (FTAs).
To avoid duty-free imports of gold from these countries, India had imposed a 12.5% excise tax, but excise duties and other taxes were cancelled after the GST was introduced in July 1st.
"The traders who import gold from South Korea earn a lot of money," says Rajesh Khosla, managing director of MMTC-PAMP, India's largest gold refiner."
"They save 10% of the import duties so they can give discounts of $10 to $15," says Khosla. Compared with those who offer 1% discount, we can't compete with them."
India is more interested in importing gold from South Korea because it can be supplied in gold or other forms without paying import duties.
The India gold premium expanded earlier this month to $11 an ounce, the highest in more than 10 months.
"The government of India understands the problem and we have asked the industry association to provide more data," said a government official in India who declined to be named."
The official said the government had asked traders involved in duty-free imports of gold to participate in the survey and asked them to clarify whether the goods were imported domestically.
He said: "this problem will soon be resolved, will be levied on this category of gold countervailing duties."."
Preliminary data from GFMS, the consultancy, showed that India's gold imports doubled to 550 tonnes in the first seven months of this year.