The reduction in duties will bring down input costs, increase value addition, promote export competitiveness and boost domestic manufacturing
New Delhi: Finance Minister Nirmala Sitaraman in her first budget of the new Modi 3.0 government has reduced the custom duties on gold and silver to 6% and that on platinum to 6.4%.
“To enhance domestic value addition in gold and precious metal jewellery in the country, I propose to reduce customs duties on gold and silver to 6% and that on platinum to 6.4%,” said Sitaraman in her budget speech.
Post the announcement, Shares of gold and jewellery retailers surged, news agency PTI reported. On the BSE, the stock of Senco Gold zoomed 6.16% to trade at Rs 1,000.80 apiece, Rajesh Exports surged 5.49% to Rs 313.90 and PC Jeweller jumped 5% to trade at Rs 74.16 — also its upper circuit limit.
In addition, shares of Titan Company climbed 3.66% to Rs 3,371.65 per piece, Tribhovandas Bhimhji Zaveri rose 2.79%to Rs 140.20, and Kalyan Jewellers India gained 1.54%t to Rs 537.05 apiece on the bourse.
Jewellery retailers were elated at the announcement as it means well for business.
“This move not only relieves consumers who have eagerly awaited this announcement but is also expected to boost gold demand in the country and create jobs for artisans,” MP Ahammed, Chairman, of Malabar Group said, explaining that high import duty often leads to increased smuggling of gold through illegal routes, which hampers the growth of the organized retail gold trade and results in revenue losses for the government.
“It is expected that the duty reduction will drastically cut down gold smuggling, thereby curbing illegal trade and enhancing tax revenues. This reduction benefits organized retail jewellers, consumers, and the government, making it a positive development for all parties involved,” he added.
The rate cuts will help boost sales, which were muted due to the prices skyrocketing in recent times.
“The proposed reduction in customs duties will enhance sales by making these precious metals more affordable,” Amit Pratihari, MD, De Beers Forevermark.
Vidita Kochar, co-founder at Jewelbox said, “The recent reduction of customs duty on gold to 6% marks a significant advancement for the jewellery industry, enhancing its competitiveness and making it more accessible to consumers. This move aligns seamlessly with our commitment to providing high-quality, affordable lab diamond jewellery to our customers.”
The jewellery sector said the reduction in duties will reduce input costs, increase value addition, promote export competitiveness and boost domestic manufacturing, news agency PTI reported.
The reduction in import duties is a major boost for our industry, which will enhance affordability for consumers and competitiveness for the manufacturing sector by releasing working capital, according to Vipul Shah, Chairman of The Gem and Jewellery Export Promotion Council (GJEPC).
Shah said, “The abolition of the 2% equalization levy and introduction of the Safe Harbour Rule on rough diamonds for sale at Special Notified Zones (SNZs) will firmly establish India as a global diamond trading hub.”
These combined measures will propel the sector’s growth, generate lakhs of jobs for small-scale diamond cutters and polishers, and contribute significantly to India’s vision of becoming a Viksit Bharat by 2047, he added.
World Gold Council Regional CEO, India, Sachin Jain said, “For the gold industry, the reduction in basic customs duty on gold and Agriculture Infrastructure and Development Cess (AIDC) will boost the overall competitiveness of the domestic jewellery industry.”
He said it would effectively reduce the overall taxes on gold from around 18.5%, including GST, to 9%.
“It’s a massive step in the right direction, as it will reduce the incentives for smuggling of gold. It will create a level playing field for honest industry stakeholders. Gold prices will also correct locally, thereby giving a boost to retail gold demand – another incentive to the Indian gold industry,” he stated.
All India Gem and Jewellery Domestic Council (GJC) Chairman Saiyam Mehra said, ” The customs duty reduction will benefit domestic jewellery manufacturers, especially small and medium enterprises, encouraging them to transition gradually to the formal channel.”
India Bullion Jewellers Association (IBJA) Vice President Aksha Kamboj said, “We believe this policy change will encourage the growth of the jewellery and bullion industry, fostering economic development and creating new opportunities.”
With lower import duties, PNG Jewellers Chairman and Managing Director Saurabh Gadgil anticipates “an increase in gold consumption and a moderation in gold prices, which have recently reached record highs”.
Kama Jewelry MD and former GJEPC Chairman Colin Shah said the move to reduce customs duty on gold and silver will provide a big boost to FTAs (free trade agreements), thereby creating a space for expanding the exports in the less explored overseas markets.
“Setting up of E-Commerce and MSME hubs under Public Private Partnership (PPP) will play a key role in facilitating services about trade and exports. The proposal to withdraw the 2% equalisation levy will assist in providing relief to digital companies, thereby giving a major boost to online buying,” he added.
With inputs from PTI
