Gems & jewellery industry welcomes duty cut on gold, silver

New Delhi: The gems and jewellery industry on Tuesday welcomed the government's move to slash customs duty on gold and silver in the latest budget, saying it will reduce input costs, increase value addition, promote export competitiveness and boost domestic manufacturing.

Presenting the Union Budget 2024-25 on Tuesday, Finance Minister Nirmala Sitharaman said, "To enhance domestic value addition in gold and precious metal jewellery in the country, I propose to reduce customs duties on gold and silver to 6 per cent and that on platinum to 6.4 per cent." Earlier, the customs duty on gold and silver was 15 per cent.

The duty on gold and silver dore was cut to 5.35 per cent against 14.35 per cent earlier.

Additionally, the customs duty on platinum, palladium, osmium, ruthenium, and Iridium, was cut to 6.4 per cent from 15.4 per cent.

The reduction in import duties is a major boost for our industry, which will enhance affordability for consumers and competitiveness for the manufacturing sector by releasing working capital, according to Vipul Shah, Chairman of The Gem and Jewellery Export Promotion Council (GJEPC).

Shah said, "The abolition of the 2 per cent equalization levy and introduction of the Safe Harbour Rule on rough diamonds for sale at Special Notified Zones (SNZs) will firmly establish India as a global diamond trading hub." These combined measures will propel the sector's growth, generate lakhs of jobs for small-scale diamond cutters and polishers, and contribute significantly to India's vision of becoming a Viksit Bharat by 2047, he added.

World Gold Council Regional CEO, India, Sachin Jain said, "For the gold industry, the reduction in basic customs duty on gold and Agriculture Infrastructure and Development Cess (AIDC) will boost the overall competitiveness of the domestic jewellery industry." He said it would effectively reduce the overall taxes on gold from around 18.5 per cent, including GST, to 9 per cent.

"It's a massive step in the right direction, as it will reduce the incentives for smuggling of gold. It will create a level playing field for honest industry stakeholders. Gold prices will also correct locally, thereby giving a boost to retail gold demand - another incentive to the Indian gold industry," he stated.

All India Gem and Jewellery Domestic Council (GJC) Chairman Saiyam Mehra said, " The customs duty reduction will benefit domestic jewellery manufacturers, especially small and medium enterprises, encouraging them to transition gradually to the formal channel." India Bullion Jewellers Association (IBJA) Vice President Aksha Kamboj said, "We believe this policy change will encourage the growth of the jewellery and bullion industry, fostering economic development and creating new opportunities." "This budget reflects a strategic approach to strengthening the sector and supporting its long-term sustainability," Kamboj added.

Malabar Group Chairman MP Ahammed said, "It is expected that the duty reduction will drastically cut down gold smuggling, thereby curbing illegal trade and enhancing tax revenues. This reduction benefits organised retail jewellers, consumers, and the government, making it a positive development for all parties involved," he stated.

With lower import duties, PNG Jewellers Chairman and Managing Director Saurabh Gadgil anticipates "an increase in gold consumption and a moderation in gold prices, which have recently reached record highs".

Kama Jewelry MD and former GJEPC Chairman Colin Shah said the move to reduce customs duty on gold and silver will provide a big boost to FTAs (free trade agreements), thereby creating a space for expanding the exports in the less explored overseas markets.

Additionally, the introduction of Credit Guarantee Scheme in the Micro, Small & Medium Enterprises (MSME) Sector for collateral-free loans will help empower the MSME sector, Shah noted.

"Setting up of E-Commerce and MSME hubs under Public Private Partnership (PPP) will play a key role in facilitating services pertaining to trade and exports. The proposal to withdraw the 2 per cent equalisation levy will assist in providing relief to digital companies, thereby giving a major boost to online buying," he added.