New Delhi: The Gem & Jewellery Export Promotion Council on Wednesday said raising gold import duty does not curb imports but inflates prices, and urged the government to hold talks with industry stakeholders for sustainable solutions.
“Hiking import duties rarely curbs gold imports, it merely inflates prices. Despite gold prices doubling recently, imports have not declined proportionally,” the council said in a statement.
The Gem & Jewellery Export Promotion Council (GJEPC) said higher duties fuel smuggling and raise export costs, while exporters now face bank guarantees of Rs 28-30 lakh per kg of duty-free gold sourced from Nominated Agencies, severely blocking working capital.
The most severe impact would be on MSME manufacturers, who account for 80 per cent of GJEPC‘s membership and are facing a “critical liquidity crunch,” it said.
The government on Tuesday raised the basic customs duty on gold to 10 per cent from 5 per cent and the Agriculture Infrastructure and Development Cess to 5 per cent from 1 per cent.
Acknowledging the government’s decision, GJEPC said it had convened a meeting with major retailers and manufacturers and written to Prime Minister Narendra Modi outlining measures to curb gold imports.
These include promoting lower-caratage jewellery such as 18-karat and 14-karat to reduce imports by 20-30 per cent, encouraging old-gold exchange programmes, reviving the Gold Monetisation Scheme to tap India’s estimated 25,000-tonne household gold stock, discouraging investment demand in bars, billets and coins — which account for 20-30 per cent of total imports — and providing special incentives for jewellery exporters.
The council said it is separately submitting a detailed paper on revitalising the Gold Monetisation Scheme to the government.
“GJEPC urges the government to engage in dialogue for sustainable solutions that align fiscal goals with export growth,” it said.
