Thailand has agreed to undertake due verification of the Certificates of Origin on gold jewellery being exported to India, sources said.
Concerned over the rising current account deficit (CAD), India’s commerce ministry had in February sought suspension of gold jewellery imports from Thailand till the time the Certificate of Origin issued by that country was verified to India’s satisfaction.
Last week, officials from both the countries discussed the issue. “It was agreed that due diligence and verification will be undertaken by Thailand to ensure there is no discrepancy,” sources said. Both sides are going to work on the issue, the sources added, adding a review meeting is expected to take place after three months.
The certificates from Thailand showed a value addition of nearly 22 per cent to take benefit of preferential trade with India under the Early Harvesting Scheme (EHS) but the actual value addition was not more than two to three per cent, in tune with market norms. Import of gold jewellery from Thailand attracts a concessional duty of only one per cent under the EHS, a bilateral agreement. India imposes a 10 per cent tax on imports from other countries.
With import duty on gold raised by India recently, there were fears that Thai jewellery exports would flood the domestic markets, taking advantage of the duty disparity.
India raised the import duty on gold on account of a widening CAD. For April-November 2012, gold jewellery imports from Thailand were valued at $92 million against just $13 million for the entire financial year of 2011-12.
In 2011-12, the CAD had reached an all-time high of 4.2 per cent of gross domestic product and is estimated to be higher in 2012-13. In the first half of 2012-13, the CAD was at 4.4 per cent, against four per cent of gross domestic product in the corresponding period of 2011-12.
Source: Bullion Bulletin