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Barely 10 days ago the US government issued an unprecedented business advisory alerting different governments about the sourcing of gold from sub-Saharan Africa, the proceeds of which could eventually be routed to benefit rogue and non-state armed actors such as the Wagner group. Now a group of gold jewellers and dealers have alerted the Centre that a few refineries in the country are importing semi-pure gold – referred to as dore in the industry – free of customs duty from African countries such as Guinea and Tanzania.

The Economic Times has reported that a few gold refineries are exploiting trade agreements of India with some poor countries to import dore gold without paying any customs duty.

Dore gold refers to bars composed of gold and other precious metals, which is often silver. It could also be created from scrap gold. On average dore gold can contain 50-75% of gold. This gold needs to be refined before it can be put to use.

“About a week ago, the Indian Bullion & Jewellers Association (IBJA) drew the government’s attention to this. The import of such gold dore is being allowed by the customs authority at zero duty where normal gold dore attracts a customs duty of 14.35%. A few refineries have already imported around 300 kg while we understand a big import consignment is being planned by a large local refiner,” said Surendra Mehta, national secretary IBJA.

“While most of the refineries in India are taking efforts to follow OECD guidelines on responsible sourcing, such questionable imports from poor African countries are being undertaken by a few refiners. If unchecked, more refiners may do such imports. This also assumes significance in the light of the recent US advisory on gold trade and imports from sub-Saharan Africa,” added Mehta.

The IBJA chief argued that gold dore can be imported with license from the Director General of Foreign Trade and obeying the rules for Import of Goods at Concessional Duty. He also said they failed to understand how gold dore could be imported from least developed countries with licence from DGFT.

Significantly, about one-fourth of the world’s gold is produced by countries in the sub-Saharan Africa. India imports about 800 tonnes of gold every year and about 40% of this amount is dore gold.

There are about 40 gold refiners in India. Of these 10 are going through a process of audit for conducting responsible sourcing of gold.

Certification of sourcing is a difficult process. “It’s a rigorous process and the certificate has to be renewed periodically. In the absence of such audit, the Indian refiner has to depend on the certificate produced by the seller. Such certificates are given by the governments of the respective countries where the gold is mined. It would be wrong to question the sourcing of all the dore that’s entering India from markets like the UAE. But going forward, the US advisory could drive refiners to go through the audit which looks into whether the mines are following the necessary rules,” said an industry official.

Significantly, though a huge amount of gold is produced in the countries to the south of the Sahara desert, there are very few refineries there. “The principal direct export markets for refining of gold from sub-Saharan Africa are reported to be the UAE, Switzerland and India, though transparency in the sector with respect to these relationships remain limited,” the advisory from the US Department of State said.

The sourcing in India might turn more stringent once the bullion spot exchange becomes operational. It would accept gold that has been obtained from a ‘kosher’ network of mines (where no impurity is added), the report claimed.