New excise duty will not hit state jewellery traders, feel experts
January, 21st 2012
While a recent government notification said that customs and excise duties would be levied on the value of gold and silver instead of a fixed amount, the gems and jewellery
industries in Gujarat seems to be unfazed by the hike in the import duties.
The import duty on gold has been fixed at 2 per cent of the value instead of the earlier Rs 300 per 10 gram, and on silver the import duty has been fixed at 6 per cent against Rs 1,500 per kg. Excise duty on gold has been fixed at 1.5 per cent of the value against the earlier rate of Rs 200 per 10 gram. Silver will attract excise of 4 per cent compared to Rs 1,000 per kg earlier. At a 2 per cent rate, the import duty on gold will be over Rs 540 per 10 gram.
This is not going to affect the local players much. While it will definitely double the customs revenue, this is the governments way of discouraging import of gold. Gold prices have a 1 to 5 per cent volatility on a day-to-day basis, so it wont affect the inherent price much, but the hike in customs and excise duties could dry up demand. When it comes to the jewellery industry in Ahmedabad, we have been a fairly steady job by importing anything between 225 to 300 tonnes every year. I dont think it is much of a worry, said Samir Mankad, Director, GSEC Limited.
Industry players believe that consumer-related demand, which is on the upswing because of festivals and the marriage season, is not likely to be affected. Earlier, we were paying 1 per cent but now it is 2 per cent which is not much when it comes to gold prices. It wont affect the gold industry in the large scheme of things as the consumer will remain unaffected, said Russel Mehta, managing director, Rosy Blue (India) Pvt. Ltd. (Orra Diamond).