India Raises Gold Jewelry Import Duty to Help Domestic Jewelers

(IDEX Online News) – The Indian government has raised the import duty on gold jewelry to 15 percent from 10 percent, but the aim of move appears to be to protect the country’s jewelry industry rather than slashing the purchase of gold from abroad to reduce the ballooning current account deficit.

Noticeably, the government did not alter its import levy on bullion, which remained unchanged at 10 percent. The result is that consumers looking for value purchases of jewelry are likely to buy Indian manufactured items.

Any impact on reducing gold imports is likely to be insignificant since jewelry is a small part of the country's gold imports.

Indian imports of gold jewelry in the April-July period were $137.57 million while total imports of bullion in July came to $2.9 billion.

"To protect the interests of small artisans, the customs duty on articles of jewelry ... is being increased," the finance ministry said.

India has taken several steps this year, including raising the tax on bullion imports three times, to curb demand of the precious metal to reduce its trade deficit and support a weak rupee.

At just under $1,300 an ounce, spot gold is down 22 percent so far this year, and appears to be on track for its first annual fall in 13 years.

The government acted after the country’s jewelry industry complained about imports of cheaper jewelry from Thailand, Malaysia and other countries.

"This is a good move for the local industry and it will support the manufacturing sector," said Haresh Soni, chairman of the All India Gems and Jewelry Trade Federation, cited by Reuters.

The increase in duty coincides with the peak buying period of festivals and the wedding season that starts in October.