India DGFT Notification No. 03/2026-27: Chapter 71 Precious Metals Import Reclassification

Mechanism

DGFT exercised its delegated authority under sections 3 and 5 of the FTDR Act 1992 to amend Schedule-I (Import Policy) of ITC (HS) 2022 for Chapter 71 (Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin). The notification inserts new policy conditions and shifts multiple tariff lines between import-status categories, effective from the date of notification.

The key operative mechanism is the Restricted-status shift: importers of affected tariff lines must now obtain a DGFT authorisation (licence) from the appropriate Regional Authority before clearing goods at Customs — a structurally tighter regime than the prior tariff + Customs-monitoring approach. Para 1.05(b) of FTP 2023 transitional arrangements have been expressly denied, meaning the restriction applies regardless of prior commercial commitments.

Product-level changes

The partial liberalisation of platinum (removing the Restricted status from pure platinum and low-gold-alloy forms) likely reflects the downstream demand from electronics, catalytic converters, and jewellery export units that need platinum input without the administrative burden of licensing.

No transitional relief

Notification No. 03/2026-27 explicitly denies the benefit of transitional arrangements under Para 1.05(b) of FTP 2023. This means importers with:

• Signed purchase contracts
• Opened or confirmed letters of credit
• Advance payments made
• Shipments already in transit

...cannot claim exemption or a grace period. The immediate-effect posture is more restrictive than most DGFT product-level notifications, which typically extend Para 1.05(b) protection to goods already in the pipeline.

Strategic rationale

The notification sits at the intersection of three ongoing Indian policy concerns:

1. Current Account Deficit (CAD) management — Gold and precious metals are routinely India's second-largest import category by value after crude oil. A Restricted-status classification allows DGFT and the Reserve Bank of India to exert licensing pressure on import volumes, complementing tariff-based controls (Basic Customs Duty of 6% on gold + Agriculture Infrastructure Development Cess of 5%) that have proven insufficient to deter the India–UAE CEPA gold-import arbitrage loop. UAE-origin gold, imported under zero-duty CEPA preference, has been a persistent CAD pressure point; a Restricted classification enables DGFT to impose end-use and country-of-origin scrutiny that BCD alone cannot deliver.

2. Loophole closure in semi-finished precious-metal articles — The shift from "Free" to "Restricted" for gold/silver-clad base metals (7109) and articles of precious metals (7114–7115) addresses a known tariff-classification arbitrage: importers reclassifying raw precious metal as semi-finished articles to access lower effective-duty rates or avoid RBI nominated-agency import channelling requirements for gold.

3. Protecting domestic jewellery value-add — India's Gems and Jewellery sector (export value ~USD 35bn/year) is shielded via the EOU/SEZ carve-out and FTP Chapter 4 exemption, ensuring export-oriented manufacturers retain unrestricted input access while import-for-domestic-consumption flows are controlled.

Downstream implications

• Bullion dealers and refiners: Companies importing silver-clad base metals or platinum-group-metal articles for industrial or institutional use must now obtain DGFT RA authorisations per consignment, adding lead time and compliance cost. Companies reliant on just-in-time precious-metal procurement will need to build buffer stock.
• Electronics component supply chains: Platinum-group metals (particularly palladium and platinum) are used in capacitors, printed-circuit board surface finishes, and semiconductor packaging. The selective liberalisation of platinum semi-finished forms (7110 series) is a positive for electronics component manufacturers; the Restricted shift on precious-metal articles (7114–7115) adds friction for finished or semi-finished precious-metal electrical components.
• Jewellery exporters: EOU and SEZ-unit exporters are fully shielded by Policy Condition No. 07. Domestic jewellers dependent on imported gold-clad semi-finished forms or silver articles face the Restricted-status burden.
• FTA arbitrage: The DGFT may use the Restricted licensing regime to apply origin-scrutiny to gold/silver articles imported under preferential FTAs (particularly UAE CEPA, ASEAN CERTA), allowing case-by-case denial of FTA benefit where substantial transformation cannot be demonstrated.

Open questions

• Will DGFT publish RA-level guidance or standard operating procedures for authorisation applications under the new Restricted categories for Chapter 71 lines?
• Will the Ministry of Finance issue a companion Customs notification tightening Bill of Entry scrutiny or requiring additional documentation for affected tariff lines?
• Does the Para 1.05(b) denial create WTO safeguard-notification obligations if the restriction functions as a de facto safeguard or non-tariff barrier?
• Will UAE CEPA or ASEAN CERTA preferential-origin claims be reviewed as part of the licensing scrutiny, effectively converting the tariff preference into a conditional benefit?