In an effort to boost gems and jewellery export, the Finance Ministry has raised the duty refund rate by nearly 31 per cent, compared with June. The incentive scheme, better known as duty drawback, now stands over 100 per cent higher than last year. Duty drawback allows the exporter to get back the duty paid on an item when it is exported.
The duty drawback rate on gold jewellery now stands at Rs 227.20 per gram of net gold content, against Rs 173.20 in June, and Rs 100.70 in 2012-13. The rate has also been revised for silver jewellery to Rs 3,436.80 a kg of net silver content, against Rs 2,590.80 in 2012-13. The new rates will be effective from September 21.
The rates have been revised to neutralise the increase in import duty on gold and silver. During the current fiscal, the import duty on gold has been revised twice, the latest one on August 13, when duty was raised to 10 per cent from 8 per cent.
On the same day, import duty on silver was raised to 10 per cent from 6 per cent. This was done to curb imports to check the rising current account deficit.
Total drawback
While announcing the new rates, the Finance Ministry said the Government would continue to support exporters with substantial total drawback.
The rates were revised on the basis of the recommendations of the Saumitra Chaudhuri Committee, which suggested a revision on the basis of relevant parameters, such as prevailing prices of inputs, rates of duty or tax and value of export goods.
“The increase in duty has been factored in in the revision of duty drawback,” Ajay Sahay, Director General of the Federation of Indian Exporters (FIEO), told Business Line , adding that this would encourage gems and jewellery exporters.
Total exports turned positive in the end of August, but gems and jewellery export are still negative. However, Sahay expects that with the revision in drawback rates, annual exports of this sector will also register a positive growth.
The Commerce Ministry did announce that overall export grew by nearly 13 per cent in August, but it is yet to give out sector-specific data.
However, data till July show that gems and jewellery registered positive export growth in April, but was negative for the next three consecutive months.
Sahay said it was expected that September data would show positive results.