Budget 2024 proposes to cut the customs duty to 6% on Gold and Silver. Moreover, the finance minister has also proposed to reduce customs duty on platinum to 6.4%.
“To enhance domestic value addition in gold and precious metal jewellery in the country, I propose to reduce customs duties on gold and silver to 6 per cent and that on platinum to 6.4 per cent,” said the Finance Minister in the Budget 2024 speech.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities says, “In the Budget, the Finance Minister announced a reduction on Basic Custom Duty (BCD) on gold and silver from 10 per cent to 6 per cent. Adding 5 percent AIDC, which remains unchanged, the total import duty on gold and silver is reduced from 15 percent to 11 percent now. As a result, the price of gold reacted lower in MCX by more than Rs 2000 to Rs 70,350, and silver by Rs 2500 to Rs 86,600 as the market prices in the lower import duty gap of 4%. The broad view remains volatile and weak as Comex gold stays below USD 2415.”
“Gold in India is more than just a precious metal. Indian consumers have an emotional connect with the yellow metal, the significance of which comes to the fore on special occasions. Given this cultural context, today’s development in the union budget of a reduction in duty on gold to 6% is a welcome move, one which is expected to drive down retail price of the metal. This in turn is expected to set off a virtuous cycle of increased consumption and contribute substantially to the exchequer and facilitate the growth of India as a precious metals hub,” says Vikas Singh, Managing Director & CEO of MMTC-PAMP.
Mahendra Luniya, chairman & founder of Vignaharta Gold said that in FY23, India’s gold imports totaled an estimated Rs 2.8 lakh crore and at a 15% import duty rate, the industry’s customs duty payout is estimated at Rs 42,000 crore, noting that the latest exact data was not available with him.
He said that it could be a significant boost for the industry and immediately bring down the cost of the yellow metal if the government agrees to its demand. “Lower prices could drive higher consumer demand and increased demand would lead to higher sales volumes, ultimately benefiting companies dealing in gold through improved topline and bottomline performance,” Luniya added.
Echoing similar sentiments, expert Amit Goel, co-founder & Chief Global Strategist at Pace 360, said that an import duty cut could boost demand leading to higher revenues and better profit margins.
“The abolition of the 2% Equalization Levy and introduction of the Safe Harbour Rule on sale of rough diamonds at SNZs will firmly establish India as a global rough diamond trading hub. These combined measures will propel the sector’s growth, generate lakhs of employment opportunities by benefitting the small-scale jewellery manufacturers & exporters and diamond cutters and polishers, thus contribute significantly to India’s vision of becoming a Viksit Bharat by 2047,” says Vipul Shah, Chairman, Gem & Jewellery Export Promotion Council (GJEPC).
