With decline in gold imports, the government may consider 2-4 per cent reduction in import duty on it in the forthcoming Budget, a move that could help boost exports and manufacturing of gems and jewellery, sources said.
The industry has already sought reduction in customs duty on gold to 2 per cent, from 10 per cent now.
“Gold imports are declining continuously. Gems and jewellery sector contributes significantly in the country’s total exports. On account of this, we are expecting a cut in the import duty. But it is up to the Finance Minister to take the final decision in the Budget,” said a source.
The government may consider cutting the duty by 2-4 per cent, sources said.
Commerce and Industry Minister Nirmala Sitharaman had last month hinted that the gems and jewellery sector, which employs about 3.5 million people, may get some incentives in the Budget.
The issues including the import duty related to this sector were widely discussed recently at a ‘Make In India’ workshop and a presentation was given to Prime Minister Narendra Modi on it by Commerce Secretary Rajeev Kher.
The ministry suggested that import duty on gold and silver be reduced to 2 per cent from the current 10 per cent.
Gold imports in December declined sharply to 39 tonnes, from 152 tonnes in November. Exports of gems and jewellery too declined by 1.2 per cent year-on-year to USD 2.66 billion in December.
The sector is one of the 25 thrust areas identified under the ‘Make in India’ programme. The campaign aims at attracting domestic and foreign investments to boost manufacturing and create jobs.
The All India Gems and Jewellery Federation has suggested that the customs duty should now be reduced to help check the smuggling of the precious metal.
The government had raised the import duty on gold to contain the widening current account deficit.