The government has tightened the wastage allowance that exporters of gold, silver, and platinum jewelry can claim at the manufacturing stage to qualify for duty-free import of raw materials. The revised norms, effective from January 1, will reduce permissible wastage across various jewelry categories, distinguishing for the first time between handmade and machine-made pieces.
Announced on Friday by the Directorate General of Foreign Trade (DGFT), these norms are more lenient than those proposed in May, which were subsequently put on hold. The new announcement overrides the previous notice from May.
Under the May guidelines, wastage for plain gold and platinum jewelry was sharply reduced to 0.5% (from 2.5%) and for silver to 0.75% (from 3.2%). For studded jewellery, the wastage allowance was cut to 0.75% for gold, silver, and platinum from an earlier 5%.
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However, after significant pushback from the gems and jewellery industry, the new Standard Input Output Norms (SION) and wastage allowances were suspended to allow for industry consultations. This suspension period was extended five times, lasting until December.
According to the new norms announced on Friday, wastage of 2.25% is allowed in handmade jewellery of gold and platinum from 2.5% applicable now and 3% in silver jewellery from 3.2%. For gold and platinum jewellery made by machines, the wastage of 0.45% is allowed and for silver it is down to 0.5%. In studded handmade jewellery of gold, silver and platinum the new norms allow for 4% wastage. For machine made studded jewellery wastage of 2.8% is allowed.
The order also applies to idols, coins, medallions, and other items crafted from these precious metals.
SION specify the required input materials to manufacture a unit of output for export purposes, incorporating wastage allowances, input-output ratios, and other parameters.
Under these rules, duty-free import of precious metals is allowed for manufacturing jewelry and other items intended for export. Exported goods must match the weight of imported duty-free metals, minus the permissible wastage, to ensure that excess metal does not enter the local market.
From: financialexpress
Financial News
