Gold import rules in India

The notified entities in India are permitted to import of Gold only after the issue of license by DGFT. The imported gold covered by the above license shall be disposed-off in the manner specified by the DGFT. The conditions for the licence are clearly mentioned in the licence itself. Within the contours of the Regulations changed from time to time, Reserve Bank of India issues directions to Authorised Dealers (ADs) under Section 11 of the Foreign Exchange Management Act (FEMA), 1999.

The salient features of the directions issued by RBI which lay down the modalities as to how the import of gold transaction has to be conducted by the Authorised Persons with their customers/constituents are furnished below.

1. The import of gold should be strictly in accordance with the Foreign Trade Policy of the Government.
2. Entities/units in the SEZ and EoUs, Advance Authorisation, Duty Free Import Authorization (DFIA), Premier and Star trading houses are permitted to import gold exclusively for the purpose of exports only.
3. Star and Premier Trading Houses (STH/PTH) can import gold on Document against Payment (DP) basis as per entitlement without any end use restrictions.
4. The import of gold dore is permitted only against a licence issued by DGFT. [W.e.f. 1.6.2017, DGGFT is considering application for grant of licence for import of gold dore, only for applicant refinery who holds a valid licence from Bureau of Indian Standards (BIS)].
5. AD Category I Banks may allow remittance for making payments for imports into India, after ensuring that all the requisite details are made available by the importer and the remittance is for bona fide trade transactions as per applicable laws in force.
6. Suppliers’ or Buyers’ Credit, or Usance period LCs wherever to be opened for direct import of gold, should not exceed 90 days from the date of shipment.
7. Nominated banks are permitted to import gold on consignment basis. All sale of gold domestically will, however, be against upfront payments. However, banks are free to grant gold metal loans.
8. The banks shall ensure that the financial standing, line of business and the net worth of the importer customer is commensurate with the volume of business turnover, before undertaking import transaction.
9. Banks shall closely examine any large or abnormal increase in the volume of business of the importer and ensure that the transactions are bonafide trade transactions.
10. While opening LC on behalf of the importer, the credentials of the supplier should also be ascertained.
11. KYC/AML norms should be strictly obeyed while undertaking transactions.
12. Banks shall follow up and record submission of the Bill of Entry for the Gold imported through them.
13. In order to establish audit trail of import/export transactions, all documents pertaining to such transactions must be preserved for at least five years.
14. The nominated banks)/ EOUs/ SEZs in Gem & Jewellery sector during the month under report as well as the cumulative position as at the end of the said month beginning from the 1st month of the Financial Year(April). Both the statements shall be submitted, even if there is ‘Nil’ position, by the 10th of the following month / half year, to which it relates.

The import of commodities are regulated by Customs Act 1962, Foreign Trade (Development & Regulation) Act 1992 and Custom Tariff Act 1975.These Regulations are amended from time to time to incorporate the changes in the regulatory framework and published through amendment notifications. Thus, the persons handling transactions of import of gold must be acquainted with the RBI guidelines issued from time to time with regards to changes in regulatory framework.