BC mining groups reject permitting delays, economic benefits study
MABC CEO Michael Goehring called the study’s methodology unsound and its conclusions deceiving.
India’s platinum imports in September jumped multifold to a record high as refiners imported a large amount of gold containing small amounts of platinum but registered the purchases with customs as a platinum alloy to avoid paying higher duties, government and industry officials told Reuters.
Such masking was possible due to what a tax official said was a loophole created by a change in policy in July whereby differential import duties were levied on gold, silver, and platinum, distinct from the previous policy of having the same taxes for all the three precious metals.
In July New Delhi raised the import duty on gold to 15% but kept the tax on platinum imports unchanged at 10.75%.
“The duty change allowed importers to explore loopholes in the system. They initially in August imported a small quantity with 3% platinum and got cleared from Delhi customs as platinum alloy,” said a senior industry official, who declined to be named.
As their imports were cleared, they brought in more gold as platinum and soon other refiners and trade houses joined them, which lifted India’s platinum imports to around 27 tonnes in September from 1.14 tonnes a year ago, trade and government sources said.
In entire 2021 India had imported 10.59 tonnes of platinum, according to data compiled by the Ministry of Commerce and Industry.
A Mumbai-based bullion dealer said refiners were taking advantage of government rule that says, “An alloy containing 2% or more, by weight, of platinum, is to be treated as an alloy of platinum.”
“The rule was framed when platinum prices were higher than gold. In recent years platinum prices crashed. But still, traders couldn’t use the rule as the import duty on both commodities was the same. After July’s duty hike, refiners started using this loophole,” the dealer said.
Dubai-based gold refiners were mixing 2% to 5% platinum in to gold bars exclusively for Indian buyers, said a Dubai-based bullion dealer, who declined to be named.
The government should promptly raise the import duty on platinum to 15% to stop this practice of importing gold under the guise of platinum, said Surendra Mehta, secretary at the India Bullion and Jewellers Association (IBJA).
India is the world’s second-biggest consumer of gold and relies on imports to fulfill most of its requirements.
“Traders are paying 4.25% lower duty for gold imports classified as platinum. This is giving them the advantage to offer discounts over rival suppliers,” said Chanda Venkatesh, managing director of CapsGold, a Hyderabad-based bullion merchant.
(By Rajendra Jadhav and Aftab Ahmed; Editing by David Evans)
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