DGFT specifies only BIS certified refineries can import dore from June 1

Only 8 units in India have been certified by the BIS

The Dollar Business Bureau

The DGFT issued a trade notification TRADE NOTICE NO.04/2018 on April 21, 2017, specifying that unrefined gold or dore can be imported only by those refineries that hold a valid licence from the Bureau of Indian Standards (BIS). This will be effective from June 1.

India imported $381,006 million worth of dore in 2015-2016 and $308,813 million in FY 2017. On an average India imports nearly 200 tons of dore in a year.

It should be recollected that the government had announced an increase in the excise duty on dore gold from 8% to 8.75% and excise duty from 9% to 9.5% thereby decreasing the duty differential with bullion that attracts an excise duty of 10%. Refineries in the excise-free zones have an advantage of 1.25% margin over imported bullion. Reacting to the announcement in the Budget by the Finance Minister, the bullion traders had expressed their reservations about the privileges being enjoyed by refineries in excise free zones, with regard to the origin of gold being imported into the country.

There are 32 gold refinery units in India, 27 of them process nearly 1467 tonnes of unrefined gold. Majority of these refining units, 18 of them are in and around the excise free zone of Rudrapur, Uttarakhand with 8 more units commencing soon. Of the 18 units only 8 have been certified by the BIS. Some of them take up dore refining on contract which will stop from June as it takes time to acquire a BIS certificate.

The world over medium and major gold mines have aligned to supplying their producing capacities with licensed refinery groups of Europe, Africa and Australia. And policy hurdles imposed by the Indian government on dore imports are preventing Indian refineries from having long-term contracts with these major mines. As a result many Indian refineries depend on sourcing dore from small or medium artisanal groups of Africa and Latin America. The purity of gold sourced from these groups ranges between 65% to 95%.  Since import of dore is becoming increasingly difficult, India’s only London Bullion Market Association accredited refinery, MMTC Pamp has started domestic jewellery scrap collection centres to meet its raw material needs.

The Dollar Business Bureau - Apr 22, 2017 12:00 IST