After a pause of more than four years, the government is all set to cut import duty on gold by about half from the existing 10%.
The move will help the country's gems and jewellery sector, which has been facing a severe blow with exports down about 10%. But the duty reduction may come in phases of 2% each, according to a senior official.
There are enough indications from the Finance Ministry towards downsizing the duty even before the Union Budget to be presented on February 1, 2018. The gems and jewellery exporters, the Commerce Ministry and other stakeholders had a separate meeting with Finance Ministry officials to soften its stance in the wake of problems faced by gold jewellers, who are also big employers.
But the imports may not be allowed across the board for everybody, and may be restricted only to jewellers who are actively involved in exporting jewellery items. Historically, gold imports have caused India's Current Account Deficit to sore to unmanageable levels, prompting the governments to restrict its imports. But the flip-side of that is the inbound shipment of gold for export purposes also gets restricted, affecting the sector adversely.
"This time, the government is looking for ways through which the precious yellow metal is made available for jewellery exporters without incurring deficit," a senior government official told DH.
Reduced import duty
Separately, Finance Secretary Hasmukh Adhia has also assured the industry that their demand to reduce import duty on gold will be looked into.
"We are conscious of the fact that the jewellery industry is important to the country from the view of employment. So there is no question of the government neglecting it. If the industry feels that there is some kind of policy neglect, we will try to definitely work on it. We are conscious of the industry's demand to reduce duty on import and we will look into it," Adhia tweeted on Sunday.
The import duty on gold was enhanced from 2% to 10% in 2013 by the then UPA government in the wake of high CAD, which has since come down. But the import duty has not been removed in the past four years.
The government is also planning to give a special package to the jewellery industry that will include diamond and precious metals. The package may be announced in the February Budget, according to sources.
The concessions may come in the form of simplified labour laws and technology upgradation in the sector, besides tax benefits.
Source: deccanherald.com