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Government hiked import duty on gold and silver to 15%

New Delhi:– As part of measures to contain the current account deficit (CAD), the UPA government hiked the import duty on gold and silver jewellery to 15 percent from 10 percent to protect the domestic industry. As part of measures to contain the current account deficit, the customs duty on gold has been revised upwards periodically in the past two years. Prior to 17th January 2012, the import duty on standard gold (of purity 99.5 percent & above) was Rs. 300 per 10 gm. The duty was raised to 2 percent w.e.f. 17th January 2012; thereafter, it was raised to 4 percent in the Budget 2012-13. The duty was further raised to 6 percent w.e.f. 21st January 2013 and thereafter, it was increased to 8 percent w.e.f. June 5th, 2013.

The duty on gold was last revised on 13th August 2013, when the duty was increased to 10 per cent. The customs duty on silver which was Rs. 1,500 per kg prior to 17th January 2012, was raised to 6 per cent w.e.f. 17th January 2012. The duty was further raised to 10 per cent w.e.f. 13th August 2013.

To protect the interests of small artisans, the customs duty on articles of jewellery and of goldsmiths or silversmiths wares and parts thereof is being increased from 10 per cent to 15 per cent, an official statement said.

It said an import duty differential between jewellery and the primary metal is needed to protect millions of artisans who depend on the labour-intensive industry after the duty on gold was increased in stages to 10 per cent on August 13.

In the absence of any duty differential, it said, 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.

The differential was 8 percent in the case of gold jewellery and 4 per cent for silver jewellery in January 2012, when the government previously revised the levy on gold jewellery.

The government has taken the right step by hiking the duty on gold jewellery. This will help protect domestic artisans, said P C Jewellers Managing Director Balram Garg.

Gold jewellery imported during 2012-13 stood at USD 5.04 billion. In the April-June quarter of the current financial year, it was USD 112 million. India imports the maximum jewellery from Thailand.

Besides providing a level playing field for domestic jewellery makers, the hike in jewellery duty seeks to contain imports of gold ornaments.

The customs duty on articles of jewellery had not been increased in line with the changes in duty rates on gold, silver and platinum since January 17, 2012, the official statement said.

Until now, the customs duty on both the primary metal and the articles of jewellery/goldsmiths or silversmiths wares were the same at 10 percent, it added.

 The government hiked the import duty on gold last month for the third time in 2013 as part of measures to contain the widening current account deficit. The duty on silver and platinum were also increased to 10 percent.

Besides, the customs duty on gold dore bars, ore or concentrate was increased to 8 percent from 6 percent.

Further, the RBI also restricted the import of gold on a consignment basis by banks.

Finance Minister P Chidambaram has said gold imports would be contained below 845 tonnes shipped in the previous financial year.

Gold imports in value terms fell to USD 650 million in August, from USD 2.2 billion in July.

India is the largest importer of gold, which is mainly utilised to meet demand from the jewellery industry.

High gold imports strained Indias current account deficit, which touched a high of 4.8 percent of GDP in the 2012-13.

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