The finance ministry on Tuesday increased the import duty on gold jewellery to 15 per cent from the earlier rate of 10 per cent in order to provide a level playing field for domestic manufacturers.
“Jewellery making is a labour intensive industry... There is an apprehension that Indian jewellery makers would not be able to compete with cheaper imports, particularly when majority of the imported jewellery is machine-made as compared to handmade jewellery in India,” an official release explained the decision.
The higher import duty would also be applicable on goldsmiths’ and silversmiths’ wares and would protect the interests of “small artisans”, it said adding that the notification on the revised rates of duty has also been issued.
The move comes after the government increased the customs duty on gold, silver and platinum to 10 per cent through successive revisions, thereby levying the same tax rate on the primary metal as well as on articles of jewellery. Domestic jewellery makers had since then raised concerns over imports of cheaper jewellery.
The higher import duty will, however, not make gold jewellery more expensive. “It is a very fair decision and will help protect the domestic industry from foreign jewellery makers,” said Ashok Minawala, past chairman, All India Gems and Jewellery Trade Federation. Though India is the world’s largest buyer of gold, jewellery imports amount to less than 5 per cent of the total gold imports into the country. Between April and July 2013, India imported gold jewellery worth $137.57 million as against $2.9 billion of bullion imports in July.
Most of the jewellery that is imported into India comes from Italy, Turkey, Dubai, Thailand, Hong Kong and the United States.
High gold import strained India’s current account deficit, which touched a high of 4.8 per cent of GDP in the 2012-13 fiscal. With gold imports at a record $162 tonne in May this year, the government has clamped down on import of the precious metal through a series of measures and duty hikes. Gold imports in value terms fell to $ 650 million in August, from $ 2.2 billion in July.
Level playing field
* The higher duty will also be applicable on goldsmiths’ and silversmiths’ wares and would protect interests of ‘small artisans’
* The move comes after the government increased customs duty on gold, silver and platinum to 10% through successive revisions