India Tightens Gold Jewelry Imports from All Countries Except UAE

India’s recent decision to reclassify imported gold jewellery from ‘free’ to ‘restricted’ marks a significant shift in its trade policy landscape. This adjustment, mandated by the Director General of Foreign Trade (DGFT), imposes a 15% duty on certain categories of jewellery imported into the country. Specifically, jewellery adorned with pearls, specific types of diamonds, and other precious stones now fall under this restricted category, necessitating prior government approval for importation.

The policy change, detailed in the DGFT notification dated June 11, excludes imports from the United Arab Emirates (UAE) under the Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE. This exemption highlights the strategic trade relations between the two nations, facilitating smoother import processes for jewellery originating from the UAE amid tightened controls for imports from other global suppliers.

The rationale behind this regulatory shift stems from India’s efforts to manage its burgeoning trade deficit, exacerbated by a significant increase in gold imports. In the fiscal year ending March 2024, gold imports surged to $1.5 billion, representing a thirty-fold increase driven largely by the liberalized import regime introduced in July 2024 for countries with which India has free trade agreements. The subsequent decision to impose restrictions aims to curb excessive imports and stabilize the trade balance, which recorded a five-month high trade deficit of $19.1 billion in April 2024, primarily due to heightened gold and silver jewellery imports.

In the commodities market, the price of gold rose by ₹50 to ₹71,540 per 10 grams on June 12, reflecting speculative activity and robust demand in the spot market. This price movement underscores the sensitivity of global gold markets to regulatory changes and economic policies.

Discussing the industry impact, the Managing Director of Kama Jeweller emphasized the operational challenges posed by the new import restrictions on jewellery and its components. Despite these challenges, he acknowledged that imports from the UAE remain unaffected, leveraging the benefits of the existing FTA to sustain trade continuity under favorable terms.

India’s revised import policy on gold jewellery represents a strategic maneuver to balance economic objectives, ensuring sustainable trade practices while addressing fiscal concerns. By tightening controls on jewellery imports from most countries and maintaining exemptions for strategic partners like the UAE, India aims to achieve prudent economic management amidst evolving global trade dynamics and market uncertainties.