An Urgent Need to Lower Gold Import Duty

An Urgent Need to Lower Gold Import Duty

The current Union Budget did not meet the expectations of gold jewelers by leaving the import duty on gold unchanged, which is creating a bottleneck for the market. Apparently, the duty was raised by government in 2013 as part of strong measures to reduce current account deficit by discouraging the import of gold. The duty was raised to nearly 10% followed by imposition of a ban on leasing of gold imports and introduction of 80:20 scheme which made it mandatory to export 20% of the gold imported.

According to Mr. Haresh Soni, Chairman of All India Gems & Jewellery Trade, these impositions should be lifted by the government to ease the functioning of gold market and reduce the incidence of black marketing which is on the rise. There has been a substantial rise in cases of gold smuggling in the past year and they are resorting to innovative methods to achieve their ends.

There is also a difference in the import duties levied on refined gold, which is at 10.3 percent and unrefined or doré gold, which is at 8.24 percent. This difference in import duties is estimated to have created losses of nearly Rs 5.6 billion for every 100 tonne of unrefined gold being refined in India. The Commerce Secretary Rajeev Kher has also stressed on the need to rationalize the import duty on gold to ensure gold imports do not touch a new low.