Bullion industry experts have expressed concerns that the government’s decision not to lower import duties on gold from the current 10 percent may result in to activities the gray market.
Industry experts said the move could fuel smuggling of the precious metal. Bullion trade is worrying rise in smuggling, even as jewelry industry is unable to get any enough bars to make the jewelry.
“This govt decision not to lower the import curbs will create the problem of supply of raw materials. The availability of raw material is going to go uncontrolled and the premium on gold back up. It will also give rise to smuggling activities,” All India Gems and Jewellery Federation (GJF) chairman Haresh Soni told PTI here.
Premiums gold is currently ruling at $ 06.10 an ounce in the domestic market, he said.
“Such negative reports affect the market and premiums gold going to go up once,” Mr Soni said.
He said the growing activities in the gray market will cost loss of income for the government.
“Reflecting the view, vice president of the Mumbai Jewellers Association Kumar Jain said the domestic jewelery sector, which provides direct and indirect job to about two crore people are struggling and production has suffered due to government policies.”
“The Council of Gem and Jewellery Export Promotion President Vipul Shah said that industry players have been demanding lowering import duties to two percent that has long been controlled CAD ago.”
The hike of existing import duty of 10 per cent in the precious metal was with backspin of the import surge witnessed during the start of 2013 The Government will was interested in curbing its growing current account deficit (CAD).
The MOF on July 25, informed Parliament that gold smuggling cases had risen to 2,441 in 2013-14. 2011-12 2012-13 and the number of such cases is at 869 and 500, respectively.
There were claims to reduce import duties on gold to 2 percent. The industry of national jewelry is dispirited because of rejection of the Government of its claim. They are of the view that, since the CAD has been Government Controlled should be considered lowering the import duty.
“The country will not lose a lot by reducing the import duty on gold and bring it at par with the price of gold in other countries. Only required gold for jewelry making will get imported. Ya, extensive global jewelry demand has seen a slowdown owing to the lower prices. Why is the government looking forward to anotherHoly Hour?”, said 100McxTips experts.