MUMBAI: India on Wednesday restricted imports on plain gold jewellery, as the world's second-largest consumer of the precious metal tries to plug loopholes in its trade policy.

Import of articles of gold have been put under the restriction category from the free category, a government notification said, adding that import under the India-United Arab Emirates Comprehensive Economic Partnership Agreement would be allowed without any license.

The Ministry of Commerce and Industry did not immediately respond to a request for comment.

The move comes as importers over the last few months have been using a policy flaw to source plain gold jewellery from Indonesia without paying any import taxes.

"Indonesia was never a gold jewellery supplier to India, but in the last few months, bullion dealers imported 3-4 tonnes from Indonesia without paying any import taxes," said a Mumbai-based dealer with a private bullion importing bank.

India levies a 15% tax on gold imports.

"Many dealers got to know about the loophole, and they were also trying to source from Indonesia. The policy change has closed that loophole," he said. (Reporting by Jose Joseph in Bengaluru, Shivangi Acharya in Delhi and Rajendra Jadhav in Mumbai Editing by Arun Koyyur and Matthew Lewis)