Jewellers want govt to reduce import duty on gold.

BANGALORE: The government's proposal to increase import duty on gold from 4% to 5% has not gone down well with jewellers. The All India Gems and Jewellery Trade Federation (GJF) has submitted its recommendation to the government reduce the import duty on gold from 4% to 2%. The government has doubled the import duty in March to 4% to check the growing current account deficit.

Bachhraj Bamalwa, chairman of The Gem and Jewellery Trade Federation , said, "Import duty on gold was increased from 1% to 4% in the 2012-13 Budget.

The smuggling of gold was practically nil before this period, but it has increased ever since the hike in import duty. Gold worth Rs 942 crore was seized during the last three months."

He said that despite a steep hike in the import duty approximately 600 tonnes of gold was imported into the country during the first three quarters of the current financial year. "The country's trade gap has also not reduced and the government's foreign exchange reserve has also come down," Bamalwaadded.

India is the world largest consumer accounting for 65% of gold consumption bought as jewellery. A World Gold Council report said that the country's gold demand dropped 24% to 607.6 metric tonnes in the January-September period compared to the same period last year.

It is estimated that gold held by Indian households is 25,000 tonnes approximately since many years. "If the government can bring 10% of these gold deposits by way of an amnesty scheme and the same is lent to jewellers as working capital, the country would not require to import gold for a minimum of three years that will help in minimising the trade gap.""

The federation has requested the government to ban trade in ETF, e-gold, and gold mutual funds, which are backed by physical gold till such time the current account deficit of the country is reduced to a satisfactory level.


Source : timesofindia.indiatimes.com