{"id":35098,"date":"2018-10-31T15:13:25","date_gmt":"2018-10-31T09:43:25","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=35098"},"modified":"2018-10-31T15:13:25","modified_gmt":"2018-10-31T09:43:25","slug":"tweaks-to-pact-with-s-korea-mooted","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/tweaks-to-pact-with-s-korea-mooted\/","title":{"rendered":"Tweaks to pact with S. Korea mooted:"},"content":{"rendered":"<p><a href=\"http:\/\/www.thehindu.com\/todays-paper\/tp-business\/tweaks-to-pact-with-s-korea-mooted\/article19705818.ece\"><span style=\"font-weight: 400;\">Tweaks to pact with S. Korea mooted<\/span><\/a><span style=\"font-weight: 400;\">:<\/span><\/p>\n<p><b>Context<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">India is looking to plug loopholes in its Free Trade Agreement (FTA) with South Korea following concerns over a recent sudden surge in imports of gold and related articles from that country.<\/span><\/li>\n<\/ul>\n<p><b>What is the issue?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There is a probability of \u2018criminal angle\u2019 behind the recent rapid rise in imports of the yellow metal from South Korea.<\/span><\/li>\n<\/ul>\n<p><b>What is the reason behind the rise?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The rise is due to certain firms, \u2018owned and operated by some Indians\u2019, allegedly misusing the India-South Korea FTA that allows duty-free import of the precious metal and its articles.<\/span><\/li>\n<\/ul>\n<p><b>Is GST the cause behind it?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">With the Gold imports from South Korea shooting up to $340, the implementation of the Good and Services Tax (GST) from July 1 led to the import surge.<\/span><\/li>\n<\/ul>\n<p><b>What was the previous way of functioning?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Pre-GST, gold imports through the non-FTA channel attracted a 10% basic customs duty (BCD) and an additional 12.5% countervailing duty (CVD), while those from the FTA route were levied a 12.5% CVD, the FTA thus eliminating the customs duty on gold imports.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Under the new tax regime, a 3% GST replaced the CVD.<\/span><\/li>\n<\/ul>\n<p><b>What does this replacement mean?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">This meant gold imports from the non-FTA route attracted 10% BCD and 3% GST, while those from the South Korea FTA channel paid only 3% GST, which could be later claimed as input tax credit.<\/span><\/li>\n<\/ul>\n<p><b>Why the issue of criminal angle?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The authorities are examining a possible criminal angle in such transactions as those entities were allegedly sending gold medallion directly from Dubai to South Korea and then exporting to India, violating FTA norms.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Under the FTA, duty-free import of gold medallion into India is currently allowed only if it has met the norm of \u2018Change in Tariff Heading\u2019 under the Harmonized System Code.<\/span><\/li>\n<\/ul>\n<p><b>What does Change in Tariff Heading means?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">This means one could send gold bars and rods from a third country to South Korea, convert them into medallion there, export to India and avail the zero-duty benefit.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Though the Centre had last month \u2018restricted\u2019 imports of jewellery, precious metal and related items from South Korea, official sources said it was only a temporary measure.<\/span><\/li>\n<\/ul>\n<p><b>Conclusion<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">In an upcoming trade meeting with South Korea, India will push for inclusion of tighter norms in the FTA on imports of gold and its items to prevent misuse.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">India will insist on a clause in the FTA specifying the criteria of (at least 35%) \u2018value addition\u2019 as well as \u2018Change in Tariff Sub-Heading\u2019 to ensure that the item has undergone substantial transformation in South Korea.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Only those furnishing the required certificate, stating the criteria have been met, will be allowed FTA benefits.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Tweaks to pact with S. Korea mooted: Context India is looking to plug loopholes in its Free Trade Agreement (FTA) with South Korea following concerns over a recent sudden surge in imports of gold and related articles from that country. What is the issue? There is a probability of \u2018criminal angle\u2019 behind the recent rapid&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/tweaks-to-pact-with-s-korea-mooted\/\">Continue reading <span class=\"screen-reader-text\">Tweaks to pact with S. Korea mooted:<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-35098","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704793711},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/35098","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=35098"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/35098\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=35098"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=35098"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=35098"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}