The ingots Despite the fact that the market has switched to discounts gold prices fell significantly in the country, mainly due to a sharp increase in the import of metal in the form of platinum alloys.
Gold was trading around $1,654 an ounce on international exchanges Friday evening markets.
The yellow metal fetches $7-10 per ounce in Mumbai and $7 per ounce in Ahmedabad.
An increase in import duty on gold to 15 percent in July and a sharp fall in the value of the rupee against the dollar kept gold prices comparatively elevated in the Indian market.
Estimates show that such disguised gold imports have increased to 22 tons in just one month.
These imports, not yet declared illegal, are cleared only at Delhi Customs.
Some ingots importers found great benefit in the ambiguous platinum alloy import rule. Besides platinum, the other metal in the alloy is gold.
The fact is that gold is subject to a 15 percent customs duty, and platinum – 10.75 percent. Therefore, the duty on platinum alloys will also be 10.75 percent. This means gold is being imported at a lower duty of 4.25 percentage points, while imports of the yellow metal in the form of platinum alloys have resulted in a revenue loss of Rs 450 crore in the last month.
We are talking about false declaration and violation of customs, say industry observers. There were complaints against the director general of foreign trade, who referred the matter to the revenue department.
No explanation has been given regarding the cessation of such imports.
Three people from different segments of the gold mining ecosystem told Business Standard that gold is coming into India in large quantities and is being sold at a price below the normal duty paid gold, resulting in prices being quoted at a discount of $7-10 in the open market. per ounce. “This practice has affected the morale of dealers and refineries that deal with gold obtained in accordance with international moral standards,” the Athenian said.
The mode of operation of importers is changing. The initial import was a few hundred kilograms to test the practice, and later the quantity increased and at present almost one ton of gold alloy is imported per day. Initially, the content of platinum was 4 percent, but now it is 6 percent, the rest is gold.
A source tracking gold imports said: “Imports through banks are limited to imports by exporters who need gold approved by London. Ingots Union Market, required for lending under the metal loans. Imports of pure or unrefined gold fell significantly because refiners pay a lower import duty of 0.65 percentage points. But gold imported in the form of platinum alloys is subject to a lower import duty of 4.25 percentage points, and local refiners can use this alloy to refine and produce gold bars.”
A leading analyst said the only option now is to make the import duty on platinum alloy the same as the highest among the rates applied to the metals that form the alloy.
The refiner said that “according to the notification dated September 2021, gold in any form, if its purity is 22 carats or above, cannot be imported by anyone except notified institutions. However, this seems to have been ignored by the customs department.”