GJEPC optimistic government may heed to reduction in gold import duty

The Gem and Jewellery Export Promotion Council (GJEPC), which is Indian’s apex body for its gem and jewellery sector, is hoping the Indian Ministry will accept its request in its recommendation letter made on January 2, 2014, to reduce the import duty. There is a possibility that the Council’s duty reduction proposal may get accepted in part or completely before the last session of parliament. The recent interim budget had been disappointing for the sector, as there was no reduction on taxes mentioned.

The said import duty was raised by the Central banks and the RBI in order to control the country’s current account deficit, but it created an adverse effect of hurting exports of the sector since last 12 months.

The import duty on import of gold bullion has been increased from Rs.300/- per 10gms to 10 percent in stages. According to Vipul Shah, Chairman, Gems & Jewellery Export Promotion Council: “Since the imposition of 80:20 scheme, the desired curb in the total import of gold has now been duly achieved. So the import duty should be rolled back to much lower rate say 2 percent” He further added that the 10 percent duty “makes the operations of smuggling economically viable, and if it is rolled back then the menace of gold through smuggling route will not be any more productive and hence the leakage will be prevented.” He cited the ill effects of gold smuggling causing a threat to the “export business and reputation of the Indian sector as per Responsible Gold and Dodd Frank Act. If the import duty is so reduced then it will also reduce the transaction cost of exports in as much as the exporter will not be required to block his fund of as high as 10 percent till the inward remittance does not come”.

The Council has once again submitted its plea towards revision of the import duty and is extremely optimistic of implementation keeping the macro objective of the increase in exports in consideration. The Indian gems and jewellery sector is the 2nd largest sector contributing to the Indian economy.