Gold and silver jewellery will become cheaper in the country ahead of the upcoming wedding season with finance minister Nirmala Sitharaman reducing import duty on gold and silver to 7.5% from 12.5% in the Union budget. Besides bringing relief to the consumers, the move would make Indian jewellery more competitive in global markets and also help reduce gold smuggling into the country, industry insiders said.
“Price of gold will come down. There is a lot of pent-up demand in the market and the reduction in duty will unleash that demand,” said Ahammed MP, chairman of Kozhikode-based international jewellery retailer Malabar Gold & Diamonds. He said high import duty earlier was indirectly promoting illegal gold transactions and thereby eroding the government’s revenues.
“The import duty reduction will make trade more compliant; transparent trade always boosts consumer confidence,” Ahammed said.
India imports around 800 -850 tonnes of gold annually. It is estimated that another 100-120 tonnes of gold enter the country through the grey market route. The duty cut may also help jewellery exports.
“In fact, high duty on precious metal had made our exports uncompetitive, leading to large Indian diaspora/NRI moving to Dubai, Hong Kong or other centres to buy jewellery, which was largely impacting the employment as well as a business in India,” said Colin Shah, chairman of Gem & Jewellery Export Promotion Council. He also said the decision to set up a Sebi-regulated domestic spot exchange for gold will “surely ease marketability and sale of gold”.