Nirmala Sitharaman urges Finance Ministry to cut in import duty on gold

In order to boost export of gems and jewellery sector, Commerce and Industry Minister Nirmala Sitharaman has urged the Finance Ministry to consider reduction in the duty on gold imports to 2 per cent from 10 per cent. She further said that the gems and jewellery sector has been very badly affected and is finding it difficult to compete in the global market because of 10 per cent duty on gold imports.

However, the minister added the Finance Ministry may look at the current account deficit (CAD) position before taking decision on the proposal as the higher import of the yellow metal has adverse bearing on India's CAD. Current account deficit happens when value of import of goods and services is more than that of exports. In the previous fiscal 2014-15, the CAD shrank to 1.3 per cent of GDP ($27.5 billion) from 1.7 per cent ($32.4 billion) in 2013-14.

The government data suggest the country’s gold imports reduced to almost half in September this year to $2 billion, as against $3.783 billion in the year-ago period. Besides, labour intensive gems and jewellery exports in October dipped by about 13 per cent to $3.48 billion. India is the largest importer of gold in the world, which mainly caters to the demand of the jewellery industry.  On the flip side, highlighting the government’s efforts on the country's overall exports, Sitharaman said the government has announced benefits such as 3 per cent interest subsidy and enhanced duty drawback rates to push exports. She further said that the Commerce Secretary is going around to all the states to talk with the state industries to discuss ways to enhance exports. The ministry is working on ways to engage more with the states to boost the outbound shipments.