Budget 2024: Jewellery industry hails cut in duty on gold, calls it a progressive move

The first budget of the Modi 3.0 government has proposed the reduction of customs duty on gold and silver to 6% from 15% to 6.4% on platinum. This will lead to an increase in domestic value addition to gold and other precious metal gems in India. Moreover, this has resulted in a reduction in prices of gold and silver, leading to a greater demand. Agricultural Infrastructure Development Cess (AIDC) has decreased to 1% from 5% and the Basic Customs Duty has reduced from 10% to 5%.

As per a report, it has been conceded by Finance Minister Nirmala Sitharaman that over a million skilled workers are employed by India, which is considered a global leader in diamond manufacturing, polishing, and cutting. Moreover, the 2% Equalisation Levy has been abolished, along with the introduction of the Safe Harbour Rule on selling rough diamonds at Special Notified Zones (SNZ). This will make raw materials accessible to the smaller manufacturers in the country directly.

The industry is optimistic about the measures that have been announced to augment the gem and jewellery industry in the country.

MP Ahammed, Chairman, Malabar Group:

“The budget proposal to reduce the import duty on gold to 6% is a highly commendable move by Finance Minister Nirmala Sitharaman. Currently, imported gold is subjected to a hefty 15% duty, including the agriculture infrastructure development cess. The bold decision to slash this duty to 6% for gold and silver, and 6.4% for platinum, marks a significant step in the right direction. This reduction has been a long-standing demand of traders in the gold sector, as it is expected to curb the rampant issue of gold smuggling, which poses a substantial threat to India’s economy. With the new rates, the duty on one kilogram of gold drops from Rs 9.82 lakh to Rs 3.93 lakh, making smuggling less attractive and more manageable.

The decision to reduce the duty by 60% will significantly curb gold smuggling and will immensely benefit India’s economy. This move will help dismantle the mafia chain involved in smuggling, leading to growth in the organized jewelry sector and increasing government revenue through GST and income tax. For consumers, the budget announcement brings a significant reduction in gold jewellery prices, which will further stimulate the jewellery business. The jewellery sector anticipates that following this reduction, there will be measures to curb illegal gold trade, with strict actions against GST evaders. Additionally, the budget’s allocation of Rs 1.48 lakh crore for employment and skill development, Rs 1.52 lakh crore for agriculture, and Rs 2.66 lakh crore for rural sector development reflects the government’s commitment to economic growth. The Economic Survey, presented in Parliament the day before the budget, has projected a 6.5%-7% growth in GDP. I believe that this significant GDP growth will positively impact all areas of people’s lives.”

Ramesh Kalyanaraman, Executive Director, Kalyan Jewellers:

“We welcome the 2024 Budget’s progressive measures to reduce customs duties on gold, silver, and platinum. 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.

The new tax regime, with its focus on increased disposable income, will boost demand for jewellery as consumers will invest in asset creation.

Kalyan Jewellers looks forward to leveraging these positive changes to further enhance the quality and global competitiveness of the organized Indian jewellery sector, contributing to the industry's growth and India's continued economic prosperity.”

Ajoy Chawla, CEO, Jewellery Division, Titan Company Ltd:

“Rationalizing of customs duty on precious metals, particularly gold, is a welcome move, considering the significant arbitrage in gold prices that existed. Hopefully, this will reduce informal/ unofficial gold inflows in the country and also provide much-needed relief on gold rates to Indian customers just ahead of the forthcoming festive and wedding season. Tanishq has lined up exciting new collections, promotional offers, and regional festive campaigns this quarter to further stimulate consumer demand.”

Uday Kumar Chandra, Managing Director, PC Chandra Jewellers:

“The lowering of customs duty on gold by 9% is a welcome decision. We shall pass on the reduction to the customers. Lower prices are expected to boost demand. The last few months saw steep prices and the category depended on offers to draw customers into the store. As we are preparing to welcome the festive season, this price drop will be a boon.”

Vipin Shamra, Chief Merchandising Officer, BlueStone:

“With the festivals and weddings in the second half, the significant reduction in customs duty on gold and platinum will not only positively impact the consumer sentiment, to begin with but also spur growth for the organised players in the Industry across the value chain in the long run.”

Also Read: Budget 2024 Reactions: Industry hails forward-thinking approach to MSMEs