The All India Gems and Jewellery Trade Federation has urged the Centre to halve import duty on gold from the current 15 per cent as the prevailing restriction on imports has already suppressed demand, easing Government concerns over widening current account deficit.
In a bid to curb import, the Government has come out with 80:20 scheme under which jewellers have to re-export 20 per cent of each gold consignment before ordering for fresh shipments.
The Federation, in a letter to Union Finance Minister P. Chidambaram, also called for doing away with cash-on-delivery for buying gold and allowing imports through letter of credit.
Haresh Soni, the federation Chairman, said that when the gold import is restricted under 80:20 scheme, there is no way the import of gold will rise until there is an overall growth in exports.
“We request you to allow SBLC (gold loan) scheme for jewellery manufacturers, wholesalers and retailers as prevalent in many countries due to volatile gold prices,” he said and added that there is a spurt in gold smuggling across the country due to high premium being levied on imports.
According to the World Gold Council report, gold demand in the September quarter fell by 32 per cent to 148 tonnes against 219 tonnes during the same period a year ago.
Jewellery demand dropped by 23 per cent to 105 tonnes (136 tonnes) due to import restrictions. Gold imports fell to 85 tonnes from 223 tonnes in the September quarter last year.
It was a record high of 338 tonnes in the June quarter, following which the Government imposed various restrictions and marked up customs duty.
Bacchraj Bamalwa, past-Chairman of GJF, said that this year Dhanteras, which is considered an auspicious occasion to buy gold, was bad and sales were down 15-20 per cent in most areas.
“Consumers were confused due to the negative publicity of the Government urging people not to buy gold.
Purchases became purely symbolic and consumers preferred lightweight jewellery this festive season,” he said.