Jewellers in the gold hub of Chennai have given a thumbs-up to the gold monetisation scheme announced in the budget.
They, however, expressed disappointment as the government did not reduce the customs duty on the yellow metal.
Prasanna Kumar, Director, Nathella, says, “We expected customs duty on gold to come down by 4 per cent.” Many jewellers in the city were also worried that smuggling of gold may continue as the import duty remains untouched at 10 per cent.
“The import duty at 10 per cent continues, but we believe it should be rationalised soon,” says, Mr. P. R. Somasundaram, Managing Director, World Gold Council. Today, South India, which has 11 of the top 20 jewellery retailers in India, accounts for almost 40 per cent of sales.
The new gold monetisation scheme, proposed by Union Finance Minister Arun Jaitley in his budget speech, will replace both the present gold deposit and gold metal loan schemes.
The new scheme will allow depositors of gold (biscuits, coins, and bars) to earn interest in their metal accounts and the jewellers to obtain loans in their metal account. Banks and other dealers would also be able to monetise this gold.
“We have been demanding this scheme for several years now. This scheme will allow customers to earn interest on their deposit of gold and also help jewellers get loans and reduce import of gold. The India gold coin too will help reduce import particularly by banks,” said N.Ananthapadmanabhan, regional chairman, All India Gems and Jewellery Trade Federation.
Gold bond
A Sovereign Gold Bond, as an alternative to purchasing metal gold, is also on cards. The bonds will carry a fixed rate of interest, and also be redeemable in cash on the face value of the gold, at the time of redemption by the holder of the Bond. “The monetisation scheme will drive recycling and enhance transparency, benefiting millions of households and the macro economy, as it has the potential to translate gold savings into economic investments,” adds Mr. Somasundaram.
It will allow customers to earn interest on deposit of gold and help jewellers get loans
