NEW DELHI: South Korea has objected to India’s move to restrict all forms of gold imports from the country, saying it is not compliant with the norms and that India should have discussed the issue first instead of unilaterally taking the decision.
The objection comes ahead of a highlevel meeting of the trade ministers of the two countries in Seoul later this week to review the India-South Korea free trade agreement. On its part, India has reasoned that the move is justified as South Korea does not produce gold but was being used only to circumvent import duty on the metal.
On August 25, India had put all forms of gold import from South Korea in the restricted category wherein importers will need permission from the government before importing them.
“They have raised objections, saying the move is not compliant with norms,” said one official privy to the details. India's decision of a clamp down came in the wake of more than $1 billion worth of gold imports from South Korea between July 1and August 21.
India's FTA with South Korea is called the Comprehensive Economic Partnership Agreement (CEPA) under which the 10 per cent basic customs duty on gold has been eliminated. Under the goods and services tax (GST), the 12.5 per cent countervailing duty on gold imports was replaced by a 3 per cent integrated GST.
Hence, as per the present norms, gold imports from a country with which India does not have a trade pact attract a 10 per cent BCD and a 3 per cent GST, while those from the FTA channel have to pay only the 3 per cent GST.
This makes imports via treaty countries attractive. Another official aware of the development said that South Korea also complained that India could have discussed the issue during the review of the CEPA, which is scheduled for later this week.
Source: economictimes.indiatimes.com