New Delhi: India is not likely to amend its free trade agreement (FTA) with the 10-member Association of South East Asian Nations (ASEAN) to curb the sharp increase of gold jewellery imports from the region. The Indian Commerce Ministry, which has been alerted by the country’s Revenue Department about the sudden spurt in gold jewellery imports at preferential duties through the FTA route, especially from Indonesia, wants strong steps to curb misuse of the treaty rather than to change its provisions, as reported in Hindu Business Line.

According to a government official, “An FTA is an agreement between two sovereign governments and its terms can’t be changed at the drop of a hat. The only way to control the deluge is by ensuring that exporters are not flouting the prescribed value-added and rules of origin norms and allowing third country gold to come in.”

Under the India-ASEAN free trade agreement in goods, gold jewellery can be imported at a preferential duty of 2 per cent (against 15 per cent from other countries), while the import duty on gold is 10 per cent. But the value added to local gold and imported gold while making jewellery has to compulsorily be 20 per cent and 35 per cent, respectively.

The Indian government suspects that Indonesian jewellers may be importing gold scrap from third countries.

The Revenue Department has already asked ASEAN countries to furnish bank guarantees in lieu of the duty benefits they enjoy while exporting jewellery to India.