New Delhi, Sept. 17: The government today raised duty on imported gold and silver jewellery and semi-finished jewellery to 15 per cent from 10 per cent.
North Block officials said the duty was raised as there were fears that with raw gold imports being taxed at the same rate as imported jewellery, Indian makers of gold jewellery could face unfair competition from other Asian producers.
A statement from the finance ministry said: “There is an apprehension that Indian jewellery makers would not be able to compete with cheaper imports, particularly when majority of the imported jewellery is machine-made compared with handmade jewellery in India.”
To give Indian jewellery manufacturers a level playing field and “to protect interests of small artisans, the customs duty on articles of jewellery and of goldsmiths’ or silversmiths’ wares and parts thereof is being increased from 10 per cent to 15 per cent,” the statement said.
Officials said there were increasing reports of cheap machine-made jewellery coming from Thailand, Malaysia and elsewhere.
The Thais, in fact, had been actively lobbying to open up the gold jewellery market on the basis of their free trade pact with India. Only two days back, on Sunday, Adul Chotinisakorn, executive director and consul (commercial) of the Thai Trade Centre, Mumbai, had told reporters that the free trade pact permitted greater gold jewellery imports.
India imported gold jewellery worth $137.57 million in the first four months of this financial year and some 401 tonnes of gold bullion to make jewellery.
In all, Indians imported some 950 tonnes of gold last financial year valued at some $55.7 billion, creating a huge trade deficit of $190.91 billion in 2012-13.
The trade deficit had sufficiently spooked investors to bet against the currency and force it to all-time lows. Besides, the rupee has come under pressure on account of the fact that 44 per cent of total outstanding debt are coming up for payment this year.
The government consequently had put a leash on gold imports by raising taxes thrice this year to take import duty on raw gold to 10 per cent. The RBI, too, had placed restrictions on importers to sharply curtail supplies.
“The government has taken the right step by hiking the duty on gold jewellery. This will help protect domestic artisans,” said PC Jewellers managing director Balram Garg.
“Higher import duty on gold and silver jewellery will also encourage exports,” Gems and Jewellery Export Promotion Council chairman Vipul Shah said.
All India Gems and Jewellery Trade Federation chairman Haresh Soni said the duty difference of 1.5 per cent between imported gold and jewellery was negligible and had encouraged gold jewellery shipments from Dubai and other West Asian countries.
The hike in jewellery duty will also discourage imports of gold ornaments, thereby helping the current account deficit situation. Moreover, at the increased rate, imports will bring more in terms of duty to the government’s coffers.
The customs duty on jewellery had not been increased in line with the changes in duty rates on gold, silver and platinum since January 17, 2012, the official statement said. Until now, the customs duty on both the primary metal and the articles of jewellery are the same at 10 per cent.
ON EQUAL FOOTING
● Customs duty on raw gold has been revised five times in past two years — raised to 2% on January 17, 2012; 4% in Budget 2012, 6% on January 21, 2013; 8% on June 5 and 10% on August 13
● However, 10% duty on jewellery was not touched since January 17, 2012
● Duty on primary metal and on jewellery same (10%)
How are artisans hit?
● Local artisans are now paying more to import raw gold, while imported finished products are flooding markets at same 10% duty. In the absence of any duty differential now as opposed to 8% in January 2012, Indian artisans are at a disadvantage vis-a-vis cheaper imports
Duty on imported gold jewellery has been increased to 15%