The Directorate General of Foreign Trade, through Notification No. 02/2026-27 dated April 1, 2026, changed the import status of all gold, silver, and platinum jewellery and parts under Customs Tariff Heading (CTH) 7113 from "Free" to "Restricted," requiring importers to obtain a DGFT licence or authorisation. The restriction took immediate effect with no transitional relief for existing contracts, letters of credit, or goods in transit.
Background
The notification targets alleged misuse of free trade agreements, particularly the India-UAE Comprehensive Economic Partnership Agreement (CEPA) and other bilateral FTAs, which some importers were reportedly exploiting to bring precious metal articles into India at concessional or zero duty rates. The government had received intelligence from customs authorities indicating a significant rise in jewellery imports through FTA routes that appeared to circumvent the standard customs duty framework applicable to precious metals.
India is the world's second-largest consumer of gold, and jewellery imports have historically been sensitive to duty differentials. The FTA route offered a back-door mechanism for importing precious metals at lower effective rates, undermining both customs revenue and domestic jewellery manufacturers who sourced gold through regular import channels subject to full duty.
Key Provisions
The notification imposes the following restrictions:
Scope: All articles of jewellery and parts thereof made of gold, silver, and platinum — including plain, studded, and articles set with pearls, diamonds, or other precious and semi-precious stones — under Chapter 71 of the ITC (HS) 2022 are now "Restricted" for import.
Licence requirement: Importers must obtain a DGFT authorisation or licence before customs clearance. No automatic or open general licence is available.
No transitional relief: The restriction applies to all pending shipments, regardless of existing contracts, irrevocable letters of credit, advance payments, or shipment status. This hard cutoff is unusual and signals the government's urgency in plugging the revenue leakage.
Exemptions: Export-oriented units (EOUs) and SEZ units are exempt, provided imports are not diverted to the domestic tariff area. Imports under Gems and Jewellery export schemes and the India-UAE CEPA tariff rate quotas within prescribed limits also retain access.
Implications for Practitioners
The immediate and retrospective nature of this restriction creates urgent compliance challenges. Importers with goods in transit or pending customs clearance under FTA routes must now obtain DGFT authorisation before release, potentially causing significant logistical and financial disruption.
Trade lawyers should advise clients to immediately assess their existing import pipeline and apply for DGFT licences where necessary. The absence of any transitional provision means that importers relying on established letters of credit face potential contractual defaults with overseas suppliers.
Jewellers and bullion dealers who had structured their procurement around FTA-route imports must restructure supply chains to either obtain DGFT authorisations or revert to standard import channels. The cost differential between FTA and standard duty routes had been substantial — the restriction effectively closes the arbitrage.
Customs brokers and clearing agents should note that goods arriving at Indian ports without the requisite DGFT authorisation will face detention and potential re-export or confiscation under the Foreign Trade (Development and Regulation) Act, 1992.
Frequently Asked Questions
Can importers challenge the lack of transitional relief for existing contracts?
The DGFT has broad power under the Foreign Trade (Development and Regulation) Act, 1992, to impose restrictions on imports with immediate effect. While importers may approach the relevant High Court or the DGFT's dispute resolution mechanism, the established precedent gives the government significant latitude in trade policy changes affecting national revenue interests.
Does this restriction apply to personal jewellery imports by individual travellers?
The notification applies to commercial imports under CTH 7113 through the formal trade channel. Personal jewellery brought by individual travellers within the duty-free baggage allowance prescribed by customs rules is governed separately under the Baggage Rules and is not directly affected by this DGFT notification.