World Gold Council welcomes Union Budget in new report

By

Isabelle Crossley

Published
Feb 25, 2021

The World Gold Council has welcomed the Union Government’s policy announcements for the gem and jewellery sector in its new budget for 2021- 2022 in a new report, hoping further favourable measures will follow.

 
The WGC predicted that the Union Budget’s lower import duty could help to boost consumer demand for gold in its new report, titled ‘Union Budget impact on Indian gold market’. The duty reduction could also lower unofficial gold imports, it said. 
 
“While the rationalisation of import duty on gold is a step in the right direction, we hope this is the first of a series of such cuts,” said the WGC’s managing director for India, Somasundaram PR, the Gem and Jewellery Export Promotion Council reported on its website.

“Tax cuts soften price increase but are not necessarily a big driver of demand unless the cut is steep or is accompanied by a sharp drop in domestic prices due to other factors. In the case of this year’s Union Budget announcement, the net reduction in duty of 2.19% juxtaposed with a 42% rise in gold prices since July 2019, when duty was last raised, cannot, on its own, be a strong enough trigger for demand.
 
“The regulatory clarity in this budget by way of the appointment of SEBI as the regulator of domestic gold spot exchanges, will spur infrastructure development and good delivery standards, enabling India to emerge as a major bullion trading hub,” added Somasundaram PR. “Directionally, this year’s budget can be considered very positive for the industry.”