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Govt hikes drawback rates for gold jewellery by 72 percent

24 Jun 2013 Evaluate

In an attempt to increase jewellery exports, the finance ministry hiked the duty drawback rate on gold jewellery by 72 percent to Rs 173.70 per gram of net gold content in jewellery from Rs 100.70 per gram earlier. Duty drawback is the reimbursement of customs duty and the recent step will also provide relief to the jewellers as they were protesting the government’s move to raise customs duty on gold imports to eight per cent.

Further, under the duty drawback scheme, the revenue department refunds the duty incidence such as excise, customs, and service tax on the imported inputs used in the manufacture of exported goods. Reacting to the drawback duty hike, the Federation of India Export Organisations (FIEO) president Rafeeque Ahmed said that recent move along with the recent rupee depreciation would add to the competitiveness of jewellery exports and expressed confidence that gems and jewellery exports will bounce back this year.

However, the government is concerned over the rising gold import, which touched 162 tonnes mark in May, while in April, it was around 100-120 tonnes, higher than the average monthly import level of 70-80 tonnes. High gold import has also become main reason for widening current account deficit (CAD), which broadened to a record high of 6.7 percent in the third quarter of FY13. 

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