DGFT Restricts Liquid Gold Imports with Immediate Effect: Major Policy Shift in Precious Metal Trade

In a significant move aimed at tightening regulatory control over the import of precious metals, the Directorate General of Foreign Trade (DGFT) has announced an immediate restriction on the import of liquid gold and other related precious metal compounds. This policy change, issued via official notification on Wednesday, marks a sharp deviation from the previously liberal import regime governing these high-value items.

What the Notification States

According to the DGFT’s latest notification, the import of liquid gold — including certain compounds and semi-finished products containing gold — has been shifted from the ‘Free’ category to the ‘Restricted’ list. This means that importers will now require special authorisation or a specific license to bring these goods into the country.

The change comes into effect immediately and is expected to impact a range of businesses, from jewellery manufacturers and gold refiners to traders and logistics providers dealing with gold-based industrial applications.

Background and Possible Motives

While DGFT has not elaborated on the rationale behind the sudden policy shift, trade analysts and bullion market experts point to multiple underlying reasons:

• Curbing Misuse of Trade Loopholes: In recent months, authorities had flagged concerns that liquid gold imports were being used to bypass customs duties, as these imports were harder to trace and often disguised as industrial inputs.

• Tackling Money Laundering and Smuggling: Liquid gold and gold compounds were reportedly being misused for money laundering and illicit transfer of wealth, prompting regulatory authorities to step in.

• Boosting Domestic Refining: The Indian government has been pushing for the development of domestic gold refining capacity and value-added production. Restricting imports of semi-finished gold products may encourage sourcing through authorised channels and domestic processing.

• Trade Balance Considerations: Gold is one of India’s top import commodities, contributing to a large share of the current account deficit. Restricting non-essential gold-related imports may also be a step toward controlling the trade deficit.

Industry Reaction

The bullion industry has expressed mixed reactions to the policy update.
While some industry leaders welcomed the move as a necessary step to create transparency and close regulatory gaps, others raised concerns over potential supply chain disruptions, especially for jewellery exporters who rely on imported gold compounds for customised designs.

A senior representative of the India Bullion and Jewellers Association (IBJA) stated:

“The restriction will help address misuse, but DGFT must ensure that genuine importers are not penalised. A fast-track licensing mechanism should be introduced.”

Implications for the Market

• Short-Term Price Volatility: The immediate impact may be felt in the form of gold price fluctuations in the domestic market, especially if supply is temporarily restricted.

• Refiners and Traders to Realign: Companies may need to restructure sourcing strategies and obtain necessary permits, leading to potential delays in operations.

• Increase in Formal Imports of Finished Gold: With restrictions on liquid forms, demand may shift toward standard bullion bars, increasing traceability and transparency.

Next Steps for Importers

Importers of gold compounds or semi-finished liquid gold products must now apply to DGFT for special import authorisations, clearly stating the intended usage, source, and end-user details.

The DGFT’s decision to restrict liquid gold imports reflects a broader regulatory tightening of India’s high-value commodity trade. It reinforces the government’s intent to curb misuse, promote domestic capabilities, and ensure greater accountability in the gold supply chain. While the move may bring initial disruption, it is likely to enhance the long-term health and sustainability of India’s precious metals ecosystem.