Besides providing a level playing field for domestic jewellery makers, the hike in jewellery duty seeks to contain imports of gold ornaments.

The government on Tuesday increased the import duty on gold and silver jewellery to 15 per cent from 10 per cent to protect the domestic industry, although it would make ornaments more expensive for consumers.

“To protect the interests of small artisans, the customs duty on articles of jewellery and of goldsmiths’ or silversmiths’ wares and parts thereof is being increased from 10 per cent to 15 per cent,” an official statement said.

It said an import duty differential between jewellery and the primary metal is needed to protect millions of artisans who depend on the labour-intensive industry after the duty on gold was increased in stages to 10 per cent on August 13.

In the absence of any duty differential, it said, “there is an apprehension that Indian jewellery makers would not be able to compete with cheaper imports, particularly when majority of the imported jewellery is machine—made as compared to handmade jewellery in India.”

The differential was 8 per cent in the case of gold jewellery and 4 per cent for silver jewellery in January 2012, when the government previously revised the levy on gold jewellery.

“The government has taken the right step by hiking the duty on gold jewellery. This will help protect domestic artisans,” said P C Jewellers Managing Director Balram Garg.

Gold jewellery imported during 2012-13 stood at $5.04 billion. In the April-June quarter of the current financial year, it was $112 million. India imports the maximum jewellery from Thailand.

Besides providing a level playing field for domestic jewellery makers, the hike in jewellery duty seeks to contain imports of gold ornaments.

The customs duty on articles of jewellery had not been increased in line with the changes in duty rates on gold, silver and platinum since January 17, 2012, the official statement said.

Until now, the customs duty on both the primary metal and the articles of jewellery/goldsmiths’ or silversmiths’ wares were the same at 10 per cent, it added.

The government hiked the import duty on gold last month for the third time in 2013 as part of measures to contain the widening current account deficit. The duty on silver and platinum were also increased to 10 per cent.

Besides, the customs duty on gold bars, ore or concentrate was increased to 8 per cent from 6 per cent.

Further, the RBI also restricted the import of gold on a consignment basis by banks.

Finance Minister P Chidambaram has said gold imports would be contained below 845 tonnes shipped in the previous financial year.

Gold imports in value terms fell to $650 million in August, from $2.2 billion in July.

India is the largest importer of gold, which is mainly utilised to meet demand from the jewellery industry.

High gold imports strained India’s current account deficit, which touched a high of 4.8 per cent of GDP in the 2012-13.

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