Since the imposition of 80:20 scheme, the desired curb in the total import of gold has been achieved
The gem and jewellery industry feels the Union budget 2014-15 should address the problem of availability of gold for the sector by tackling the twin hurdles of the 80:20 scheme and the 10 per cent import duty on gold.
The 80:20 scheme and the higher import duty were introduced last year to combat the high current account deficit.
The scheme allows only nominated agencies to import gold provided that 20 per cent of the imported gold shipment is exported.
Haresh Soni, Chairman, All India Gems & Jewellery Trade Federation (AIGJF), told this correspondent that there were procedural hurdles in the implementation of the scheme. “It must be scrapped. It has caused high premia and a monopolization of the business. Besides, there is lack of proper distribution and exporters are finding it difficult to meet commitments.’’
Vipul Shah, Chairman, Gem & Jewellery Export Promotion Council (GJEPC), said, “since the imposition of 80:20 scheme, the desired curb in the total import of gold has been achieved and it should now be scrapped.’’
The industry wants import duty on gold to come down from 10 per cent to 2 per cent “because there has been a many-fold rise in gold smuggling. From a level of 40 cases of smuggling registered in 2012-13, in 2013-14, there were 148 cases,’’ Mr. Soni said, adding that there should be a 10 per cent differential between import duty on finished gold/silver jewellery and the raw material (gold) “to prevent the entry of cheap, low quality jewellery entering the Indian market in large quantity from Singapore, Dubai and Malaysia. The duty on finished goods is now 15 per cent.’’
He said the government should mobilise idle gold, “as about 25,000 tonnes is lying with Indian trusts, religious trusts and individuals. We have suggested amendments to the existing gold deposit scheme.’’ Mr. Shah felt the complex tax regimes needed simplification. “The introduction of a presumptive or turnover tax will bring us on a par with peer manufacturing centres like Thailand, Israel and China. There is also a need to set up Special Notified Zones for trading of rough diamonds,’’ he said.