Winning Bizness Desk

Mumbai. In a move aimed at curbing illegal gold imports, the Indian government has placed fresh restrictions on the import of specific precious metal alloys—namely those containing more than 1% gold content. The crackdown targets palladium, rhodium, and iridium alloys, which are otherwise widely used in several high-value industries including electronics, medical devices, and industrial machinery.

Authorities discovered that certain importers were bypassing high customs duties on gold by routing the yellow metal into the country disguised as these low-duty or duty-free alloy imports. This manipulation was enabling gold to be sold in the domestic market at a significant profit margin, all while evading standard taxation and customs scrutiny.

How the scheme worked

Gold, in the form of bars, coins, and jewellery, attracts import duties between 6% and 22%, depending on the form and channel of import. In contrast, the three alloys now under restriction fall in the platinum group of metals, attracting little to no import duty.

According to a source quoted by NDTV Profit, unscrupulous traders exploited this gap by importing these alloys with over 1% gold under the pretense of industrial usage. Once inside the country, the gold was chemically separated and reintroduced into the market—undermining both customs revenue and fair trade practices.

Government takes corrective action

To stop this misuse, the government has now made it mandatory to obtain a specific license for the import of palladium, rhodium, and iridium alloys if they contain more than 1% gold. This will allow authorities to monitor and verify the end-use of such imports and eliminate channels used for gold smuggling under industrial cover.

Why these metals were chosen

While palladium, rhodium, and iridium are part of the platinum group, they are not considered rare earth metals. They are, however, prized for their unique characteristics—such as corrosion resistance, electrical conductivity, and catalytic performance—which make them indispensable in sectors like automotive manufacturing, glass production, and medical equipment.

Industrial significance of the alloys

These metals are critical to multiple industries:

* Jewelry and Dental Use: Palladium and rhodium are popular choices for crafting fine jewellery and dental fillings due to their finish and durability.

* Electronics: They are essential in making electrical contacts, connectors, and various components in high-end electronic devices.

* Automotive Catalysts: Rhodium and palladium are central to catalytic converters, which help vehicles meet emission norms.

* Glass and Furnace Applications: The alloys' high melting points make them suitable for use in glass manufacturing and high-temperature furnaces.

* Medical Field: Iridium is used in durable surgical tools and sometimes in targeted cancer therapies.

Revenue and security concerns

This gold import loophole not only deprived the exchequer of revenue but also posed concerns for market integrity and economic transparency. With the new checks, the government aims to protect legitimate industries while cracking down on misuse of duty exemptions.

Summary Points:

• Government restricts imports of palladium, rhodium, and iridium alloys with over 1% gold content.
• The metals were being misused by traders to bring gold into India under low-duty tags.
• Importers chemically extracted gold from these alloys to evade 6-22% gold import duties.
• New licensing rules have been introduced to prevent such disguised imports.
• The three metals are used in electronics, jewellery, medical and industrial applications.
• Though nearly duty-free, they are now under scrutiny due to their misuse.
• The move aims to safeguard revenue and stop illegal gold trading through backdoor channels.