IBJA: gold jewellery duty cut unlikely

The India Bullion and Jewellers Association (IBJA) has stated that it is unlikely that the import duty on gold jewellery will be cut at the upcoming Union Budget due to implications it would have for the Centre.

Indian gold jewellery importers have been expressing their frustration with what they perceive to be a high import duty rate in the sector. Recently, the Commerce Secretary, Rita Teaotia, called for a review of the duty rate on gold which currently stands at ten percent. A current issue is that some gold importers are exploiting the difference in rates between countries with a free trade agreement with India and those without. Teaotia, therefore, was not necessarily saying that she would make any moves to adjust the rate for the purpose of making importers’ businesses more profitable although many in the industry are calling for this.

Nitin Khandelwal, President of the Gem and Jewellery Federation (GJF), has stated that he believes it would be “disastrous” to cut gold import duty and balance it out with a hike on Goods and Services Tax (GST) on jewellery as some are suggesting. However, Khandelwal suggested that it would be possible to address the import duty rate without making any changes to the current GST rate of three percent. It has also been mentioned that any increase in jewellery GST brought about to offset a reduction in the duty rate would only serve to encourage smuggling which would drive the market underground and take away any potential benefits to the government.

Since the introduction of the GST in July this year, the gold jewellery market has found itself struggling in India. It is expected that winter festive sales with boost the sector but it may be a long time before it recovers to where it was before demonetisaton started the sales decline a year ago.

IBJA: gold jewellery duty cut unlikely

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