The government on Thursday tightened compliance standards for gold imports under the advance authorization system, introducing stricter quantity limits, physical verification requirements and regular reporting obligations, amid increased scrutiny of precious metal imports.
In a notification, the Directorate General of Foreign Trade (DGFT) said that advance authorization (AA) for the import of gold “will be issued subject to a maximum permissible quantity of 100 kilograms”.
Earlier, there was no limit on the import of gold under the Advance Authorization (AA) system, which allows duty-free import of gold for export purposes.
According to a government official, the stricter norms were introduced after the import duty on gold was increased to 15% due to concerns that the system could be misused for “price arbitrage”.
“There is a high probability that the AA scheme may be misused for immediate bulk import and price arbitrage,” the official said, speaking on condition of anonymity.
The measures include a cap of 100 kg per permit, mandatory physical inspection of production facilities for new applicants, a requirement to meet at least 50% of the export obligation under previous licenses before new permits are issued, and stricter monitoring through fortnightly import and export reports from permit holders and monthly reports from regional authorities.
The government raised import duties on gold and silver to 15% on Wednesday, reversing a 2024 tariff cut, as the government moved to curb soaring imports of the precious metal, reduce the trade deficit and support the rupee amid mounting external pressures. The Treasury announced the changes through several customs notices on May 12. The revised rates came into effect on May 13. According to the announcement, the government has increased the basic duty on several categories of gold and silver imports to 10% from 5%, while the Agricultural Infrastructure and Development Tax (AIDC) of 5% continues, taking the total effective import tax to 15%.
DGFT has made physical inspection mandatory for applicants applying for gold import permit for the first time. In accordance with the notification, the regional office concerned will “conduct a mandatory physical inspection of the applicant’s production facility” in order to verify the “existence, capacity and operational status” of the facility.
Another key change is that exporters applying for subsequent permits to import gold will now have to meet at least 50% of the export obligations under previous licenses before new permits are granted.
“Any subsequent AD for import of gold will be deemed to be issued only after fulfilling at least 50% of the export obligation prescribed in the previous ADs for gold,” the DGFT said.
The government has also tightened monitoring requirements by mandating fortnightly performance reports from permit holders, verified by an independent chartered accountant, covering gold imports and exports made under the scheme. The regional offices will further submit monthly consolidated reports to the DGFT headquarters for “centralized policy monitoring and oversight”, according to the notification.
The move comes amid a growing political focus on gold imports after India’s import bill for the precious metal surged in recent years, putting pressure on the domestic currency.
