The Government has reduced import duty on gold findings to four per cent from the earlier 10 per cent. Gold findings are small components such as hooks, clasps, clamps, screw-back, pins and catches that are used in holding different parts of jewellery together.
The development has come as a major relief for the gem and jewellery sector which has been fighting a major slowdown in demand.
Gold jewellery demand has fallen 30 per cent to 125 tonnes in the second quarter of this fiscal due to the economic slowdown and a sharp run-up in gold prices. In value terms, demand was down 10 per cent to Rs 34,950 crore, in the June quarter.
Gold findings are imported to manufacture the finished product for sale in the domestic market or for exports.
The import duty on gold findings was first increased to Rs 750 per 10 grams from Rs 500 in Budget 2010-11. It was further enhanced to five per cent of the import value in January 2012 and subsequently doubled in the latest Budget.
The increase in manufacturing and incidental costs of the jewellery sector has made India uncompetitive in the global markets. This has led to a 14 per cent dip in gold jewellery exports to $798 million in the first five months of this fiscal.
The Gem and Jewellery Export Promotion Council (GJEPC) has raised the issue with both the Department of Commerce and the Department of Revenue and has had subsequent meetings with the concerned secretaries and senior officials.