The new duty structure aimed to boost domestic manufacturing has changed the way India imports platinum and palladium. The duties levied on import of platinum group metals (PGM) is 7.5%, 10% or 12.5%, depending on the form and use. The import of noble metal solutions containing platinum or palladium now attracts a higher duty of 10%, up from 5% and the catalytic converter imports duties have risen to 15% from 10%. To aid Indian companies to domestically fabricate platinum and palladium imported for manufacturing, the salts or noble metal solutions are taxed at just 7.5%, compared to 12.5% if imported for any other purpose.
Any industry importing salts and noble metal solutions get the benefit of lower duty and not just autocatalyst fabricators. Since autocatalyst makers do not manufacture salts and solutions themselves, they will now source salts and solutions domestically benefiting the Indian fabricators.
“As a result, the share of unwrought/powder form of total PGM imports has increased further. For instance, from 48% in 2019, the share of Pt imports in unwrought/powder form has jumped to 73% this year. Similarly, for Pd, the share has more than tripled from 24% in 2019 to 82% in 2020. By contrast, deliveries of other products, such as Pt and Pd nitrate, Pd chloride and Pd on carbon, have all-but vanished,” notes the latest edition of a newsletter by the independent precious metals research consultancy ‘Metals Focus’.
Previously, the import duties on PGM were inverted as all PGMs imported into India attracted a 12.5% duty, while metal and noble metal solutions imported by autocatalyst companies faced a lower duty of 5%. Due to this, the Indian manufacturing was not cost-effective. The current duties favour domestic manufacturers but have become complex.
India had subjected the import of precious metals with high custom duties since 2013 as it had a negative impact on the foreign exchange and current account deficit.