Govt imposes limits, stricter monitoring on gold imports

In a notification, the Directorate General of Foreign Trade said Advance Authorisation for import of gold “shall be issued, subject to a maximum permissible quantity limit of 100 kilograms.”Earlier, there was no limit on gold imports under the Advance Authorisation scheme—which permits duty-free import of gold for export purposes.(Bloomberg)The government on Thursday tightened compliance norms for gold imports under the Advance Authorisation scheme, introducing stricter quantity caps, physical verification requirements and periodic reporting obligations amid heightened scrutiny of bullion imports.In a notification, the Directorate General of Foreign Trade (DGFT) said Advance Authorisation (AA) for import of gold “shall be issued, subject to a maximum permissible quantity limit of 100 kilograms”.Earlier, there was no limit on gold imports under the Advance Authorisation (AA) scheme—which permits duty-free import of gold for export purposes.People also askAI powered insights from this story•5 QUESTIONSThe Directorate General of Foreign Trade (DGFT) has imposed a maximum permissible quantity limit of 100 kilograms for gold imports under the Advance Authorisation scheme. New applicants also face mandatory physical inspection of their manufacturing facilities, and subsequent authorizations require fulfilling at least 50% of export obligations under previous licenses.The government has tightened norms for gold imports due to concerns that the Advance Authorisation scheme could be misused for price arbitrage, especially after the import duty on gold was increased to 15%. This move aims to curb surging precious metal imports and narrow the trade deficit.Stricter monitoring includes requiring authorization holders to submit fortnightly performance reports, certified by a chartered accountant, covering gold imports and exports. Regional offices also submit monthly consolidated reports to the DGFT headquarters for centralized oversight.While silver has higher industrial demand and growth potential, its returns are more volatile, making it riskier than gold for small investors. Silver is best treated as a tactical addition rather than a primary alternative for capital preservation, for which gold offers a safer choice.A falling gold-silver ratio, such as dropping below 55, indicates that silver is outperforming gold. Historically, ratios closer to 50 suggest stronger silver outperformance, while a ratio above 80 implies silver is relatively undervalued.According to a government official, the tighter norms were introduced after import duty on gold was increased to 15%, amid concerns that the scheme could be misused for “price arbitrage”.“There is high probability that the AA scheme may be misused to import large quantities immediately and take price arbitrage,” the official said, requesting not to be named.The measures include a cap of 100 kg per authorization, mandatory physical inspection of manufacturing facilities for new applicants, a requirement to complete at least 50% export obligation under previous licences before fresh authorizations are issued, and stricter monitoring through fortnightly import-export reports by permit holders and monthly reporting by regional offices.The government on Wednesday raised import tariffs on gold and silver to 15%, reversing the 2024 duty cuts, as the government moved to curb surging precious metal imports, narrow trade deficit and support the rupee amid mounting external pressures. The finance ministry notified the changes through multiple customs notifications on 12 May. The revised rates came into effect on 13 May. According to notifications, the government has increased the basic customs duty on several categories of gold and silver imports to 10% from 5%, while the Agriculture Infrastructure and Development Cess (AIDC) of 5% continues, taking the total effective import tax to 15%.The DGFT has made physical inspection mandatory for first-time applicants seeking gold import authorizations. Accord