Rising Gold Import Duty to Boost Grey Markets

SEATTLE (Scrap Monster): Various industry analysts have condemned the recent hike in gold import duty from 10% to 12.5%, as proposed in the recently presented budget by the Indian government. Many fear dramatic rise in gold smuggling activities. Meantime, the government clarified that the decision is part of its policy to reduce imports of non-essential items.

Speaking at a post budget analysis programme organized by the Southern Gujarat Chamber of Commerce and Industry (SGCCI), analyst Jay Narayan Vyas noted that the hike in gold import duty is unlikely to dent gold consumption, but instead make gold smuggling more rampant in the country.

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The All-India Jewellery Trade Council (GJF) members who met Finance Minister Nirmala Sitharaman called for holistic approach to jewellery sector by way of incentivizing gold. According to them, the hike will only encourage illegal gold trade in the country. The World Gold Council (WGC) too expressed concerns that the decision may spur grey market. Meantime, the All India Gems and Jewellery Domestic Council (GJF) urged the government to incentivize gold mining in the country, which will ensure sufficient availability of gold within the country. This in turn will reduce imports from foreign countries, it said.

However, the Finance Secretary Subhash Chandra Garg clarified that the decision to raise import duty on gold was taken after careful assessment of various factors including its likely impact on smuggling.