What discount do we get in custom duty in IIBX?

 

What Discount Do We Get in Customs Duty in IIBX?

India's push towards formalizing and digitizing its gold market took a significant leap with the launch of the India International Bullion Exchange (IIBX) in 2022. Positioned at GIFT City (Gujarat International Finance Tec-City), IIBX serves as a regulated platform for bullion trading, enabling qualified jewellers and entities to import gold in a transparent, cost-effective, and compliant manner.

One of the major incentives for participating in IIBX is the discount on customs duty offered on gold imports made through this exchange. This article explores in detail what that discount is, how it works, who can benefit, and what it means for India’s bullion industry.

What is IIBX (India International Bullion Exchange)?

The India International Bullion Exchange (IIBX) is India's first international bullion exchange, designed to streamline the import and trading of gold and silver. It aims to:

  • Provide a transparent and efficient price discovery mechanism.

  • Facilitate direct access to international suppliers.

  • Reduce India’s dependence on unregulated gold imports.

  • Promote GIFT City as a global hub for bullion trading.

Regulated by the International Financial Services Centres Authority (IFSCA), IIBX allows qualified jewellers, banks, and bullion dealers to import gold into India through an electronic trading platform.

Customs Duty on Gold: A Quick Overview

Before diving into IIBX-specific discounts, let’s look at the standard customs duty structure for gold imports into India (as of 2024–2025):

  • Basic Customs Duty (BCD): 12.5%

  • Agriculture Infrastructure and Development Cess (AIDC): 2.5%

  • Social Welfare Surcharge (SWS): 10% of BCD (i.e., 1.25%)

Total effective customs duty = approximately 16.25%

This high duty often leads to:

  • Higher domestic gold prices

  • Increased instances of gold smuggling

  • Pressure on India’s current account deficit

What is the Customs Duty Discount via IIBX?

When importing gold through IIBX, qualified jewellers and importers are entitled to a customs duty rebate or discount, making it a more cost-effective route compared to traditional channels.

✅ Customs Duty via IIBX (as of 2024–2025):

ComponentStandard Route     IIBX Route
Basic Customs Duty (BCD)12.5%         10.0%
Agriculture Infrastructure Cess2.5%                              2.5%
Social Welfare Surcharge (10% BCD)1.25%         1.0%
Total Effective Duty~16.25%        13.5%

✅ Total Savings: ~2.75% to 3% on gold imports

This differential makes IIBX a preferred platform for gold procurement, especially for qualified jewellers and financial institutions.

Who Can Avail the IIBX Customs Duty Discount?

The discount is not open to the general public but is offered to the following qualified participants:

1. Qualified Jewellers

To become a Qualified Jeweller (QJ), the applicant must:

  • Be a company or partnership firm registered in India.

  • Have a minimum net worth (currently ₹25 crore).

  • Be registered with the Directorate General of Foreign Trade (DGFT).

  • Comply with KYC norms and guidelines set by IFSCA.

2. Authorized Entities

Banks, bullion dealers, and financial institutions registered with SEBI or IFSCA may also participate in the IIBX, subject to registration and compliance requirements.

How Does the Duty Discount Work?

When gold is imported through IIBX:

  1. Electronic Trading: Buyers place bids or accept offers for gold bars listed by international suppliers.

  2. Import Clearance: Once the trade is completed, gold is imported into India via GIFT City SEZ.

  3. Reduced Duty Assessment: The customs duty applicable under the IIBX route (e.g., 10% BCD) is assessed by customs authorities at the IIBX vault or bonded warehouse.

  4. Transfer to Domestic Area: The gold is then cleared and delivered to the buyer after applicable duty is paid at the discounted rate.

Benefits of Using IIBX for Gold Imports

✅ Lower Import Duty

The biggest incentive — a near 3% discount in total customs duties — makes a significant impact on large-volume imports.

✅ Better Pricing and Transparency

Live trading ensures international price discovery, reducing price manipulation or over-invoicing risks.

✅ Access to Global Suppliers

Jewellers can source directly from LBMA-accredited refiners and international bullion banks.

✅ Secure and Regulated

Gold is stored in IIBX-approved vaults within GIFT City, under strict regulatory oversight.

✅ Efficiency and Cost Savings

The entire import process is digitized, reducing paperwork, time delays, and middlemen costs.

Impact on India’s Gold Market

  1. Boost to Organized Imports:
    The IIBX model discourages unofficial or grey-market gold imports by offering a regulated, cheaper alternative.

  2. Better Profit Margins for Jewellers:
    A ~3% cost savings translates to improved margins or better pricing for customers.

  3. Reduced Dependence on Banks:
    Jewellers no longer need to rely solely on banks for gold supply, promoting competition and efficiency.

  4. Encouragement of Local Manufacturing:
    Cheaper gold inputs promote jewelry exports and "Make in India" initiatives in the gems and jewellery sector.

Challenges and Considerations

  • Eligibility Barrier: Only large, financially sound jewellers currently qualify, leaving out smaller players.

  • Limited Awareness: Many jewellers are still unaware of the IIBX framework and benefits.

  • Liquidity Constraints: As a new platform, IIBX may still be building deep liquidity and supply chains.

  • Regulatory Compliance: Participants must comply with IFSCA, SEBI, and DGFT rules, which require legal and financial due diligence.

Conclusion

The customs duty discount available through the India International Bullion Exchange (IIBX) is a game-changer for India’s gold trade. By offering a ~3% lower effective duty, IIBX makes gold imports more economical, transparent, and accessible — especially for large, compliant jewellers and financial entities.

As awareness grows and regulatory procedures are streamlined, IIBX is likely to become the preferred gateway for importing gold into India, reducing costs, enhancing transparency, and reinforcing India's ambition to become a global gold trading hub.


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