By M P Ahammed
The government’s move contains smuggling of gold by significantly reducing the import duty in the Union Budget has raised hope among the industry that the government will take further steps to control the illegal gold trade. The government can take strict action against GST evaders and effectively use digital technology to help prevent tax evasion by a section
of the unscrupulous trade.
Lowering the import duty has been a long-standing demand of the jewellery sector, as higher import duty has been giving rise to smuggling of gold which is detrimental to the development of organised jewellery retail. Lower import duty makes smuggling unviable.
Reduction in gold smuggling will have a far-reaching impact on the economy. Apart from dismantling the unethical practices, it will boost business in the organised jewellery sector. This, in turn, will increase GST and Income Tax revenues for both the union and state governments. Consumers will also benefit from lower gold jewellery prices, stimulating demand and driving growth in the jewellery business.
Simultaneously, gold is set to shine brighter than ever on the consumption and investment platters of the people of the country. The budget proposal to cut the import duty on gold to 6 percent is a monumental decision of the government and it could not come at a better time. A previous high 15 percent duty, including the agriculture infrastructure development cess, was prohibitive when it comes to volume-driven gold jewellery purchases. Finance Minister Nirmala Sitharaman’s bold move to reduce it to 6 percent, along with similar cuts for silver and platinum to 6 percent and 6.4 percent respectively, is a positive step for the jewellery industry and the Indian economy. The move will further strengthen the consumer sentiment towards gold with the enhanced accessibility to the yellow metal.
Overall, the first budget of the third NDA government has some truly commendable proposals. The budget allocation of Rs 1.48 lakh crore for job creation, education and skilling, will boost the employment landscape of the country. The plan to offer one-year internships with a Rs 5,000 monthly allowance is a smart idea that will make graduates more employable. The Rs 1.52 lakh crore allocation for agriculture and allied sectors shows the government is moving in the right direction. Additionally, the budget includes Rs 2.66 lakh crore for rural development and Rs 11 lakh crore for capital expenditure, which are also
positive moves.
The recent economic survey 2023-24 shows strong inclusive growth in the Indian economy after the pandemic, with an expected GDP growth of 6.5 to 7 percent this financial year.
In conclusion, the reduction in gold import duty is a significant and positive step that will benefit the jewellery sector and the economy. The budget lays the foundation for driving economic growth, creating jobs and improving the quality of life for all.
(M P Ahammed is the Chairman at Malabar Group)
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