Budget 2024: Industry relieved by customs duty reduction in gold, discusses benefits on the trade  

Jewellers opine that the Budget will not only offer relief to consumers but will also boost gold demand in the country and create jobs for artisans 

Mumbai: Jewellers across the country can now find relief following Finance Minister Nirmala Sitharaman’s announcement of a reduction in customs duty on gold from 10% to 6%. This adjustment leads to a significant decrease in the retail price of jewellery, including cess, by 9 percentage points (from 15% to 6%), while the wholesale prices will see a reduction of approximately 4%.  

Various members from the industry expressed their gratitude for the Finance Minister’s proposal and offered their insights on the positive impact of this move.  

According to MP Ahammed, Chairman, Malabar Group, the latest budget move will not only offer relief to consumers but will also boost gold demand in the country and create jobs for artisans. He pointed out the repercussions of high import duty that often leads to malpractices in the trade. “High import duty often leads to increased smuggling of gold through illegal routes, which hampers the growth of the organized retail gold trade and results in revenue losses for the government. It is expected that the duty reduction will drastically cut down gold smuggling, thereby curbing illegal trade and enhancing tax revenues,” he commented.  

This sentiment was echoed by Colin Shah, Managing Director, Kama Jewelry, who said that the cut in the customs duty will play a major role in bringing down the cases of smuggling and provide cost benefits to consumers in the country, offering a major fillip to the demand in the domestic market.  

Shah is also of the view that the move “will provide big boost to FTAs and create space for expanding exports in lesser explored overseas markets.”   

“Further, introduction of Credit Guarantee Scheme in MSME sector for collateral-free loans will help empower the MSME sector. Setting up of ecommerce and MSME hubs under PPP (Public private partnership) will play key role in facilitating services pertaining to trade and exports.”   

“Finance Minister’s proposal to withdraw two per cent equalization levy will assist in providing relief to digital companies, thereby giving major boost to online buying,” Shah said adding that “Acceptance of Special Notified Zones (SNZs) is another welcome step which will help in bringing transparency in trade activities in the SNZs.”  
“This budget has announced a slew of measures to boost overall economic growth of India. For the gold industry, the reduction in basic customs duty on gold from 10% to 5% and Agriculture Infrastructure & Development Cess (AIDC) from 5% to 1% will boost the overall competitiveness of the domestic jewellery industry. It will effectively reduce the overall taxes on gold from around 18.5% (including GST) to 9%. It’s a massive step in right direction, as it will reduce the incentives for smuggling of gold. It will create a level playing field for honest industry stakeholders. Gold prices will also correct locally, thereby giving a boost to retail gold demand – another incentive to the Indian gold industry.”

Speaking on similar lines, Sachin Jain, Regional CEO, India, World Gold Council emphasized on how it significantly reduces the impel to smuggle gold. “This budget has announced a slew of measures to boost overall economic growth of India. For the gold industry, the reduction in basic customs duty on gold from 10% to 5% and Agriculture Infrastructure & Development Cess (AIDC) from 5% to 1% will boost the overall competitiveness of the domestic jewellery industry. It will effectively reduce the overall taxes on gold from around 18.5% (including GST) to 9%. It’s a massive step in right direction, as it will reduce the incentives for smuggling of gold. It will create a level playing field for honest industry stakeholders. Gold prices will also correct locally, thereby giving a boost to retail gold demand – another incentive to the Indian gold industry.”

For Saurabh Gadgil, Chairman and Managing Director, PNG Jewellers, the decision is aligned with industry’s expectation from the budget and would positively impact brand’s business and the industry’s growth. “Lower import duties could increase gold consumption, and lead to price moderation. We welcome this decision and look forward to its positive effects on the industry and the market,” he said.  

“The announcement is going to benefit the sellers and the consumers equally. To promote the development of the diamond cutting and polishing industry, the finance minister has proposed safe harbour rates for foreign mining companies selling raw diamonds in the country and that, is a great move,” said Amarendran Vummidi, Managing Partner, Vummidi Bangaru Jewellers.  

“The budget particularly focused on employment and skilling, which is the need of the hour.  I appreciate the government’s initiative of employment-linked skilling through 5 schemes and initiatives as part of the PM’s package,” Vummidi added. 

Saiyam Mehra, Chairman, All India Gem & Jewellery Domestic Council observed that reduction in custom duty could accelerate employment generation in India and benefit domestic jewellery manufacturers, especially small and medium enterprises, encouraging them to transition gradually to the formal channel. He commented, “The finance minister has increased the scope of working capital loans to SMEs and MSMEs, which will help these units expand their businesses in the future. The extension of the direct benefit transfer scheme to the manufacturing sector, with separate salary and Employees’ Provident Fund transfers directly to accounts of employers and employees, is a great move,” he said. 

The cut in the import duties is also expected to benefit jewellery buyers since they are the end consumers of the product. “Gold jewellery has always been a secure asset for jewellery consumers and is still so. Now, the reduction in the custom duty will benefit them as they will be able to buy more jewellery for the same amount of money,” Annargha Uuttiya Chowdhuury, Director, Anjali Jewellers, said.

Rajesh Rokde, Vice Chairman, All India Gem & Jewellery Domestic Council said, “The expansion of working capital loans for SMEs and MSMEs in the jewellery sector will provide the much-needed boost.”

Ramesh Kalyanaraman, Executive Director, Kalyan Jewellers said that his company is looking forward to leveraging the positive changes announced by the FM and to further enhance the quality and global competitiveness of the organised Indian jewellery sector. “The new tax regime, with its focus on increased disposable income will boost demand for jewellery as consumers will invest in asset creation,” he said. “These changes, coupled with the Government’s commitment to enhancing domestic value addition and craftsmanship, are poised to significantly benefit the jewellery industry, further contributing to the sector’s growth,” he added. 

Written by Aparna Bhowmick & Bhavya Mishra 

Retail Jeweller India Exclusive