All-Kerala Gold and Silver Merchants’ Association has expressed protest against the hike in the import duty of gold from six per cent to eight per cent.
“As a responsible trade body, we are concerned at the worsening current account deficit and have constructive suggestions to offer in the matter,” said B. Girirajan, president of the association.
DIALOGUE DEMANDED
He requested the Union Finance Minister to engage the apex trade body in a dialogue to suggest ways to solve the crisis.
“The latest hike is the third such in the last two years. This indicates that earlier hikes have not yielded desired results. The trade body was not taken into confidence on the latest hike,” Girirajan said.
The trade has been growing at a healthy clip over the last 20 years. This has resulted in substantial investment, creating millions of new job opportunities.
Some of the recent policy prescriptions on gold imports were counter-productive and need to be revisited.
While deciding on policy, the Government should take into account technological upgrading the industry has undergone and means of livelihood offered to millions of skilled and unskilled people.
DUTY INCIDENCE
The latest levy has taken total incidence of duties on a kg of gold to Rs 2.10 lakh and would only go to ensure a profit of Rs 2.37 lakh for every kg smuggled in.
A natural consequence would be an increase in hawala money transactions, entailing huge social cost, Girirajan said.
Several issues on the supply side were propping up genuine concern trade that the supply of the metal was being needlessly choked. This could encourage hoarding.
Over the years, the country has become one of the largest exporters of hand-crafted gold jewellery. The export requirements are fully met by imports.
Any restriction on imports will adversely impact jewellery exports, Girirajan said.