Budget 2023: Will there be a gift of cheap gold in the budget? Finance Minister can make this big announcement – import duty cut on gold may be announced in budget

Import duty should be brought down to 9 percent

Colin Shah, MD, Cama Jewellery, has said that the government should bring down the import duty on gold to 9 per cent in the budget. He said, ‘The jewelery industry needs special attention from the government. It is a huge exporter, creates huge employment opportunities, is highly regulated as well.’

Export of gold jewelery has decreased

The total gross exports of gold jewelery (plain and studded) declined by 4.55% to Rs 4,635.64 crore in December 2022. While it was Rs 4,856.47 crore for the same period last year. The total gross exports of all types of studded gold jewelery declined by 21.95% to Rs 2,265.90 crore in December 2022. It was Rs 2,903.01 crore in December 2021.

These are the disadvantages of high import duty

1. Higher import duties have increased the incentive for informal imports. This has resulted in a huge jump in smuggling cases.

2. There have also been incidents of duty evasion through other means such as import of platinum alloy to take advantage of lower import duty as compared to gold. About 25 tonnes of such imports were recorded during September and October 2022.

3. Gold has been trading at a continuous discount for the last few months. Discounts averaged $30 in December 2022 and roughly $15 through July 2022.

4. The benefit of the discount in the prices is being given only to the cash and unorganized traders. While this is adversely affecting the organized players as they cannot compete with the informal market due to the wide price difference.

5. They cannot compete with the prices in the informal market, despite the difference in duty that gold refineries receive. This has made many Indian refineries unviable.