Budget 2020: Commerce Ministry Proposes Cut In Gold Import Duty
The commerce ministry has sought reduction in the import duty on gold in the forthcoming budget with a view to pushing exports and manufacturing of the gems and jewellery sector, a source said.
In its budget proposals, the ministry has suggested its finance counterpart to consider a significant reduction in the import duty on the yellow metal, they said.
In the last Budget, the government had increased the import duty on the yellow metal to 12.5 percent.
The gems and jewellery export industry has sought reduction in the import duty to 4 percent in the budget, which is scheduled to presented on Feb. 1.
Gold imports in December declined sharply to 39 tonne, from 152 tonne in November.
India's gold imports, which have a bearing on the current account deficit, fell about 7 percent to $20.57 billion during April-November period of the ongoing financial year, according to the commerce ministry data.
Imports of the yellow metal stood at $22.16 billion in the same period of 2018-19.
The decline in gold imports has helped in narrowing the country's trade deficit to $106.84 billion during the eight-month period under review as against $133.74 billion in the year-ago months.
Gold import had been recording a negative growth since July this year. However, it grew about 5 percent to $1.84 billion in October and 6.6 percent to $2.94 billion in November.
India is the largest importer of gold, which mainly caters to the demand of the jewellery industry.
In volume terms, the country imports 800-900 tonne of gold annually.
To mitigate the negative impact of gold imports on trade deficit and CAD, the government increased the import duty on the metal to 12.5 percent from 10 percent in this year's budget.
Industry experts claim that businesses in the sector are shifting their manufacturing bases to neighbouring countries due to this high duty.
Gems and jewellery exports declined about 1.5 percent to $20.5 billion in April-November this fiscal.
The country's gold imports dipped about 3 percent in value terms to $32.8 billion in 2018-19.
The CAD narrowed to 0.9 percent of gross domestic product or $6.3 billion in July-September, 2019-20 from 2.9 percent or $19 billion in same period last year, according to the Reserve Bank of India data.