Indian exports of gold jewelry from the domestic tariff zone in fiscal year 2013-14 jumped 141.58% year-on-year to $ 5.68 billion. Meanwhile, exports of these goods from special economic zones (EPZs) fell sharply by 66, 28% to $ 5.36 billion compared to $ 15.9 billion in the 2012-13 fiscal year. This trend is already observed in the current fiscal year. In April-May 2014, exports of gold jewelry from the domestic tariff zone increased by 13.61% year-on-year to $ 728.69 million, while exports from the SEZ fell by 30.19% to $ 542.72 million.
The sharp increase in the export of gold jewelry outside the FEZ and the corresponding decline in exports through the SEZ amid weak demand in foreign markets have attracted the attention of the government. There were fears about whether this situation is plausible and natural, because the growth in turnover in the zones where local tariffs and taxes are operating, and the drop in sales in exempted from taxes and duties SEZ looks illogical.
The government is studying the situation and suggests that exporters from the domestic tariff zone could fraudulently increase the cost of deliveries to countries with low taxes or preferential tax treatment in order to apply for benefits (for example, duty-free imports). According to some suspicions, the goods exported in this way are then returned to the country, and gold is used for subsequent exports. The execution of such circular transactions allows counterparties to obtain huge revenues.
Large exporters are also profiting from the Reserve Bank of India (RBI) scheme 20:80 (when designated banks or agents can import gold only with the subsequent export of 20% of this volume).
It is reported that some major exporters from the domestic tariff zone sell 80% of imported gold on the domestic market with a 6-8% premium (even taking into account the 10% duty), using the deficit of yellow metal in local markets amid import restrictions, Financial Express .
On the other hand, SEZs are free trade centers and can ensure the import of gold without customs fees only for export after the creation of value added.