Indian Commerce Ministry pushes for cut in gold import duty

NEW DELHI (Scrap Monster): The Indian Commerce and Industry Minister Nirmala Sitharaman urged the country’s Finance Ministry to consider reduction of import duty on gold.

The higher duty on gold imports was imposed with the aim of reducing gold imports into the country. Although gold imports more than doubled in August this year, the imports have declined substantially during the months of September and October. The imports declined to $2 billion in September this year from the $3.783 billion during the same month a year before.

The Minister further noted that lowering of gold import duty structure will help to boost exports of gems and jewellery. In its proposals to the Finance Minister, the Commerce Ministry noted that higher gold import duty has badly affected the gems and jewellery industry in the country. Abolishing or lowering of duty on gold imports will be a big relief for the domestic industry by ensuring cheaper source of supply. The jewelry and gem export business in the country, which employs thousands of skilled workers, is currently struggling hard to compete with global market players on account of the higher duty to be paid on imported gold.

Meantime, latest trade statistics released by the Gems & Jewellery Export Promotion Council (GJEPC) states that the country’s gems and jewelry exports nosedived by nearly 13% to $3.48 billion during the month of October this year.

The government had raised import duty on gold to 10% after higher gold imports pushed the country’s Current Account Deficit (CAD) to 4.8% of GDP in 2012-’13. However, CAD has fallen sharply to 1.7% in 2013-’14 and to 1.3% in 2014-’15. Commerce and Industry Minister noted that CAD situation in the country is comfortable at the moment. The CAD during first quarter of the current fiscal has narrowed to 1.2% when matched with 1.6% during the corresponding quarter last fiscal.

However, the Minister urged Finance Ministry to take a final decision on the proposal only after taking a detailed look at the CAD position.