The Finance Ministry has handed out a handsome relief to the gold jewellery trade through a 72 per cent hike in the duty drawback rate on gold jewellery.
The duty drawback rate has been hiked to Rs 173.70 per gram of net gold content in jewellery from Rs 100.70 per gram earlier.
The trade was up in arms with the Government for the latter’s move to hike import duty on gold to 8 per cent.
In January 2012, the Government moved to an ad-valorem structure for gold imports by imposing a duty of 2 per cent as against the then existing customs duty level of Rs 300 per ten grams.
The 2 per cent Customs duty on gold imports was hiked to 4 per cent in March 2012 and then raised to 6 per cent in January this year. This was raised to 8 per cent a few weeks back to discourage gold imports.
Reacting to the hike, the Federation of India Export Organisations (FIEO) President Rafeeque Ahmed said the move, along with the recent rupee depreciation, would add to the competitiveness of jewellery exports.
Ahmed also expressed confidence that gems and jewellery exports will bounce back this year going by the positive trend seen in April.
Under the duty drawback scheme, the revenue department refunds the duty incidence (customs, excise and service tax) on the imported inputs used in the manufacture of exported goods.
India’s gold and silver imports touched a whopping $15.8 billion in April-May, adding pressure on the current account deficit.
This had prompted the Government to take several measures, including a hike in customs duty on gold to discourage imports.