Jewellers in the gold hub of Chennai have given a ‘thumbs up’ to the gold monetisation scheme announced in the Union Budget on Saturday.
They are, however, disappointed the government has not reduced Customs duty on the yellow metal. Prasanna Kumar, director, Nathella Jewellery, said, “We expected Customs duty on gold to come down by 4 per cent.”
Many city jewellers are also worried that smuggling of gold may continue unchecked as import duty remains untouched at 10 per cent. “It should be rationalised soon,” says P.R. Somasundaram, managing director, World Gold Council.
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South India, which has 11 of the top 20 jewellery retailers in India, accounts for almost 40 per cent of gold sales in the country.
The gold monetisation scheme proposed by the Finance Minister in his Budget speech will replace the gold deposit and gold metal loan schemes.
The new scheme will allow depositors of gold (as biscuits, coins and bars) to earn interest in their metal accounts and for jewellers to obtain loans in their metal account. Banks and other dealers too will be able to monetise gold.
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“We have been demanding this scheme for years now. This will allow customers to earn interest on their gold deposits and also help jewellers get loans and reduce import of gold. The India gold coin will also help reduce import, particularly by banks,” said N. Ananthapadmanabhan, regional chairman, All India Gems and Jewellery Trade Federation.
A Sovereign Gold Bond, as an alternative to purchasing metal gold, is also on the cards. The bonds will carry a fixed rate of interest and be redeemable in cash for the face value of 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,” said Mr. Somasundaram.