Duty cut on precious metals to help contain smuggling, but cost govt Rs 28,000 cr in revenues: GTRI

New Delhi: The significant duty cuts on precious metals will help reduce smuggling, but will result in an annual revenue loss of over Rs 28,000 crore for the government based on 2023-24 import levels, think tank GTRI said on Tuesday.

The Budget has significantly reduced customs duties on precious metals, cutting duties from 15 per cent to 6 per cent for gold bars, 14.35 per cent to 5.35 per cent for gold dore, 15.4 per cent to 6.4 per cent for platinum, 15 per cent to 6 per cent for silver bars, and from 14.35 per cent to 5.35 per cent for silver dore.

The Global Trade Research Initiative (GTRI) said the 2024 Budget has introduced significant reductions in Basic Customs Duty (BCD) across various sectors, including precious metals, electronics, critical minerals, other metals, marine, agriculture, chemicals, petrochemicals, drugs, textiles, and leather.

"The significant duty cuts on precious metals will help reduce smuggling and cost the government an annual revenue loss of Rs 28,000 crore based on FY24 import levels," it said.

In FY2024, India imported gold worth USD 45.54 billion and silver worth USD 5.44 billion, while exporting jewellery worth USD 13.23 billion.

"With the reduction of the Most Favored Nation (MFN) duty from 15 per cent to 6 per cent, this revenue loss was calculated," GTRI Founder Ajay Srivastava said, adding, "while the government has not provided reasons for the tariff cuts, one possible explanation is to address the large quantities of bullion imported at concessional rates via the India-UAE Comprehensive Economic Partnership Agreement (CEPA)".

On critical minerals, it said India is a net importer of most critical minerals and zero duty imports may lead to development of processing of these minerals.

Currently, 70 per cent of global processing of most critical minerals happens in China.

The customs duty on several critical minerals has been reduced to zero. These minerals include antimony, beryllium, bismuth, cobalt, copper, gallium, and germanium.

"The duty reductions reflect a strategic move to bolster domestic industries, promote exports, and reduce dependency on imports," it said.

It added that while these changes present opportunities for growth and development, careful monitoring and adjustments will be necessary to prevent misuse and ensure the intended economic benefits are realised.