While a recent government notification said that customs and excise duties would be levied on the value of gold and silver instead of a fixed amount, the gems and jewellery
industries in Gujarat seems to be unfazed by the hike in the import duties.
The import duty on gold has been fixed at 2 per cent of the value instead of the earlier Rs 300 per 10 gram, and on silver the import duty has been fixed at 6 per cent against Rs 1,500 per kg. Excise duty on gold has been fixed at 1.5 per cent of the value against the earlier rate of Rs 200 per 10 gram. Silver will attract excise of 4 per cent compared to Rs 1,000 per kg earlier. At a 2 per cent rate, the import duty on gold will be over Rs 540 per 10 gram.
“This is not going to affect the local players much. While it will definitely double the customs revenue, this is the government’s way of discouraging import of gold. Gold prices have a 1 to 5 per cent volatility on a day-to-day basis, so it won’t affect the inherent price much, but the hike in customs and excise duties could dry up demand. When it comes to the jewellery industry in Ahmedabad, we have been a fairly steady job by importing anything between 225 to 300 tonnes every year. I don’t think it is much of a worry,” said Samir Mankad, Director, GSEC Limited.
Industry players believe that consumer-related demand, which is on the upswing because of festivals and the marriage season, is not likely to be affected. “Earlier, we were paying 1 per cent but now it is 2 per cent which is not much when it comes to gold prices. It won’t affect the gold industry in the large scheme of things as the consumer will remain unaffected,” said Russel Mehta, managing director, Rosy Blue (India) Pvt. Ltd. (Orra Diamond).
The government seems to be killing two birds with one stone as it will garner more revenue while this might also reduce the imports a little. It will not affect us much as I import the gold, make it into jewellery and export it back. I will enjoy the duty drawback scheme as well. For every 1 gram, the traders or the jewellery makers will have to pay around Rs 40 to 45 extra,” said Sanjay Kothari, Chairman, Gems & Jewellery Export Promotion Council (GJEPC).
Source : indianexpress.com