MUMBAI – The India Bullion and Jewellers Association has urged the government to raise the duty drawback on exports of gold jewellery as the 2.5 percentage point increase in the import duty coupled with 15% rise in gold prices have rendered exports of unviable.
“We request you to issue a fresh notification, rectifying the difference between the duty drawback refunded and duty actually paid on gold imports,” the bullion body said in its letter to Finance Minister Nirmala Sitharaman.
The Duty Drawback On Exports Of Gold Jewellery Is Typically Around 90% Of The Import Duty
The duty drawback on exports of gold jewellery is typically around 90% of the import duty. It is a refund of the import duty paid upon re-export of gold after value addition.
The government had last revised the duty drawback on export of gold jewellery to 272,000 rupees per kg in February when the import duty at 10% on 1 kg gold, calculated on the government-fixed tariff value of $422 per 10 gm, was 299,620 rupees per kg.
Since then, the import duty on gold was raised to 12.5% from 10.0% in the Union Budget for 2019-20 (Apr-Mar). Additionally, prices of the metal have surged over 15% since then and are currently near record high levels of 38,000 rupees per 10 gm.
At the current tariff rate of $482 per 10 gm and 12.5% import duty, the duty paid on gold is at around 427,775 rupees per kg while the duty drawback refunded is still at 272,000 rupees per kg, which is only 64% of the duty paid.
India’s exports of gold jewellery fell 5% to $4.09 bln in Apr-Jul, according to data from the Gem & Jewellery Export Promotion Council. End
US$1 = 71.74 rupees