According to a notification issued by the Directorate General of Foreign Trade (DGFT), the restrictions have come into effect immediately. The government has made it clear that no exemptions will be granted under any circumstances, including existing contracts, letters of credit, advance payments, or shipment stages. Even pre-decided deals will now fall under the ambit of the new regulations, with no benefit of transitional arrangements being extended.
Under this directive, the import policy for all products classified under ‘Chapter 71’ has been revised. This includes pearls, precious and semi-precious stones, metals such as gold and silver, jewellery, imitation jewellery, and coins. While the government had earlier imposed restrictions on gold and silver jewellery, the scope has now been expanded to cover all related items comprehensively.
India has maintained a Free Trade Agreement with the 10-nation ASEAN bloc since 2010, under which several goods are subject to reduced or zero import duty. However, this provision was being exploited by certain traders who were importing gold under the guise of platinum jewellery to bypass duty obligations.
In Mumbai, such practices led to the availability of cheaper gold in the market. Importers were leveraging low or zero import duty benefits by bringing in large quantities of unmounted jewellery from countries like Thailand. These items were declared as platinum jewellery, despite containing nearly 90% gold and only about 4% platinum. By classifying them as platinum jewellery, traders were availing zero-duty benefits under the FTA, thereby distorting the market.
This practice adversely impacted legitimate businesses and caused significant revenue losses to the government. Industry sources indicate that approximately 5 tonnes of such jewellery have entered India through various ports over the past two months. As a result, the government has incurred an estimated loss of ₹450 crore, with the financial damage continuing to escalate monthly.
The government believes that the newly imposed restrictions will curb such unfair trade practices and bring greater transparency to the import system. However, the decision has received mixed reactions from industry stakeholders. While some experts have supported the move, they have also urged the government to simplify the licensing process. They argue that stringent regulations may create challenges for honest traders as well.
The development marks a critical intervention in safeguarding domestic markets and government revenue, signaling a stricter regulatory stance against the misuse of international trade frameworks.
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