Jewellery import not too affected by import duty hike
Budget 2012-13 laid out a 1% excise duty levy on unbranded jewellery and a 2% increase in basic customs duty to 4% on import of gold bars, coins and platinum. According to All India Gems and Jewellery Trade Federation, imposition of these taxes will impact lives of millions of artisans who are involved with this industry. In lieu of this and demanding a rollback of the duties, the trade union has been on strike since the past two days and has announced extension of demonstration by another two days. The federation has indicated that Indian jewellers are losing up to Rs 1000 crore of sales per day in strike.
However, Pranab Mukherjee is strong-willed and has not budged from his Budget proposals. He reasons that higher gold imports meant the country spent more in dollar-terms, which in turn widens the current account deficit.
Note that India does not have any big mines and production is far too less from what we have. The country imports nearly 900 tonne of gold annually.
Speaking to CNBC-TV18, Nilesh Parikh, chairman of Shree Ganesh Jewellery says that the mismatch between import of gold bars and jewellery could be a loophole that jewelers will now look to exploit. "It does not mean that there will be more import of jewellery as such," he says. "Part will be imported while part of it will come through lowering making charges," he says.
He brings to light that Indian customers prefer Indianized gold jewellery than international designs. Therefore, the organized sector is not likely to be impacted much by the duty hike, he opines. "Of course, the others will be hit very hard," he says.
Parikh sees demand for the yellow metal faltering going ahead. "Jewellery too might be affected, but not as much as solid gold," he says.
Source : moneycontrol.com
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