'High import duty may spur gold smuggling'.

KOCHI: Gold merchants' association in the state is of the view that the recent increase in the import duty of gold from 2% to 8% will spur smuggling activities.

"We are of the opinion that most of the non-banking financial companies and commercial banks are responsible for the sizeable chunk of bulk imports," said B Girirajan, president of All Kerala Gold and Silver Merchants Association (AKGSMA).

According to him, traditional jewellers buy back the ornaments, coins and bars sold by them, but the banks and agencies don't follow that. "A direct result of this is that every time, these agencies will have to resort to fresh imports of the precious metal to replenish their stocks," he noted.

Studies conducted by AKGSMA showed that the demand for jewellery remained stable or even declined over the last few years. However, our country has become one of the largest exporters of handcrafted gold jewellery over the years and this export requirement is fully met by imports, Girirajan said.

"Any restriction on imports will adversely impact our jewellery exports. This is the third such hike in the last two years. This is a clear indication that the earlier hikes have not yielded the desired results," he added.

Source : timesofindia.indiatimes.com