Imports of what’s being dubbed “liquid gold” have seen a remarkable surge, driven by a clever method that allows importers to bypass customs duties, according to recent data. This rise follows the latest budget, which closed another loophole for tax evasion, further accelerating shipments of these gold compounds.
Liquid gold refers to compounds mixed with other elements used predominantly in industrial applications. Importers can bring in these compounds duty-free from countries like the UAE, Japan, and Australia, thanks to trade treaties, as opposed to facing a 6% duty on pure gold. Once these shipments arrive in India, gold is extracted at small refineries.
Statistics from the Directorate General of Commercial Intelligence and Statistics reveal that imports of these compounds skyrocketed 9.25 times over the previous year and 2.84 times from the previous quarter, totaling 69,879 kg in the January-March period alone. This influx translates to approximately $1.29 billion in gold imports. Conversely, traditional gold imports plummeted 51.2% sequentially and 0.9% year-on-year, down to $9.5 billion in Q4FY25. While these higher liquid gold imports skew trade data, they also cause significant revenue loss for the government.
In FY25, India imported 111,856 kg of liquid gold from the UAE, Japan, and Australia. Given that these compounds contain a minimum of 15% gold, this means the actual gold imports equate to about 16,778 kg. At an average gold price of ₹90 lakh per kg, the government reportedly lost around ₹906 crore in customs duty this fiscal year, based on calculations by Mint.
Despite being legally permissible, this practice is distorting market dynamics. Surendra Mehta, national secretary of the India Bullion and Jewellers Association, noted that the disparity in duties encourages some to sell gold at significantly discounted rates. This, in turn, complicates accurate price discovery in the market.
Queries sent to the Directorate General of Foreign Trade and the commerce and industry ministry did not elicit a response.
The rise in liquid gold imports was particularly pronounced in the January-March quarter, coinciding with new regulations. The DGFT classified platinum alloys containing less than 99% platinum as “restricted” as of March, following budget announcements declaring tighter controls. Importers previously exploited loopholes to import alloys boasting minimal platinum content-sometimes as low as 2%—while comprising up to 98% gold. With this new categorization, many have switched to liquid gold compounds to avoid customs duties.
Per the Customs Tariff Act, liquid gold falls under HS code 28433000, usually attracting a 10% basic customs duty. However, imports from Japan, the UAE, and Australia are exempt from this duty under respective trade agreements. These nations dominate the market, making up about 87% of such shipments.
Typically, gold compounds contain lower purity levels, with 15-22% gold content, and can be refined into pure gold. Importers benefit from direct delivery without permits, unlike traditional gold, which mandates licenses and must go through regulated channels like the India International Bullion Exchange (IIBX). This discrepancy could discourage traditional gold imports through the IIBX, as noted by Mehta.
Interestingly, despite the surge in liquid gold imports, gold imports through the IIBX increased 11.7 times year-on-year to 93,072 kg in FY25. The shifting nature of gold imports might lead to misleading data, wherein policymakers may incorrectly assume a decline in overall gold imports, even as the commodity is still entering the country through alternative channels.
### Categories:
– Trade
– Economy
– Import Dynamics
– Taxation
### Tags:
– Gold Imports
– Liquid Gold
– Customs Duty
– Economic Impact
– Trade Agreements
Original Source: https://www.livemint.com/news/india/liquid-gold-imports-duty-evasion-platinum-alloy-imports-loss-11749631397218.html
Category :
Tags:
Publish Date: 2025-06-12 05:45:00
