Kolkata: Dubai has imposed a 5% import duty on gold and diamond jewellery, a move which is likely to hurt Indian exports at a time when demonetisation has hit business at home.
The new levy may , however, boost bridal jewellery sales in India because many Indian shoppers had turned to Dubai owing to the cheaper gold there and the price difference may no longer be attractive enough.
“Nearly 45-50% of gold jewellery consumed in Dubai goes from India.It will hurt some big exporters to Dubai from India,“ said Rajiv Popley , director of Mumbai-based jewellery firm Popley & Sons. Jewellery design in Dubai is expected to get a major boost as dependence on imports from India reduces, executives said. The import duty is being seen as a precursor to the introduction of a valueadded tax regime in Dubai, they said.
Rajesh Mehta, chairman of Rajesh ExportsBSE 0.55 %, said import duty introduced by Dubai will not apply to all exports from India to the Emirates. “Our jewellery is mostly re-exported from Dubai to other parts of the world. There is no duty on jewel lery that is imported for ort. The jewellery export re-export. The jewellery export ed by us for local use in Dubai will attract a 5% duty,“ he said. India's handmade jewellery is highly popular in Dubai, where Gold Souk, a prime market for the yellow metal and similar to Zaveri Bazar in Mumbai, houses many prominent wholesale and retail jewellers.
Buying jewellery from Dubai has been lucrative for Indian tourists due to reliable quality of gold there.Further, Indian tourists can avoid 10% customs duty if they wear a reasonable amount of jewellery .“Over the years Rs 4,000-5,000 crore of bridal jewellery purchase for a certain class of people has shifted to Dubai. A significant portion of this business can come back to India,“ said Ashok Minawa ..
Source: economictimes.indiatimes.com