New Delhi, June 18: Jewellery exporters have urged the government to ease the restrictions on gold imports, imposed by the previous UPA government to contain a ballooning current account deficit (CAD).
“We have requested the government to take a relook at the policy and create a level-playing field for Indian jewellers by reducing the import duty on gold and silver to 2 per cent,” Vipul Shah, chairman of the Gems and Jewellery Export Promotion Council (GJEPC), said.
“At present, the 10 per cent duty as applicable makes the operations of smuggling economically viable. If the import duty is rolled back, the menace of gold through the smuggling route will not be any productive and, hence, the leakage will be prevented,” the council said in a presentation to the finance ministry.
However, the government may take a cautious stand as the spike in global crude prices caused by the civil war in Iraq could widen the trade deficit. Two-thirds of India’s crude oil requirements are met through imports.
Fieo president M. Rafeeque Ahmed said if the war-like situation in Iraq persisted, it might push the oil price by another $15-20 per barrel in the next couple of months. Crude prices have already touched $113 per barrel, which may add an additional $4-5 billion to the oil import bill besides pushing inflation.
The council has demand-ed scrapping the existing 80:20 scheme, imposed in August. Under the scheme, nominated agencies are allowed to import gold on the condition that 20 per cent of the inward shipment will be exported.
If the import duty is reduced, it will bring down the transaction cost of exports, Shah said, adding that it is an appropriate time to scrap the 80:20 scheme as the CAD is under control.
The CAD, which touched a record high of $87.8 billion in 2012-13, eased to $32.4 billion in 2013-14 after the government restricted import on gold.
Gems and jewellery exports fell about 9 per cent to $39.5 billion in the last fiscal from $43.34 billion in 2012- 13, mainly due to decline in the imports of raw gold and silver.
Import of gold and silver dipped 40 per cent to $33.46 billion in 2013-14.