Govt to come out with new gold policy next week

The Centre will announce a new Gold Policy next week with incentives to assuage gold traders upset due to high import duty and a 3% GST levy impacting their business and jewellery export.

“The incentives will include an import duty cut on gold and reduction of GST rates for jewellery exporters among other,” sources told DH.

Gold jewellery traders were badly hit after demonetisation of 2016 and post GST emphasis on transparent trade of the yellow metal. Rural India, from where two-thirds of India's gold demand comes, was worst affected due to cash ban. Rural purchases are cash dominated.

India's gold import duty is one of the highest and traders are demanding a steep cut to 4% from 10%. The duty was imposed in 2013 when India's current account deficit touched a historic high. Before that gold attracted a meagre 2% import duty.

India is the largest importer and consumer of gold after China. As the gold overseas tradeonly in dollar, the net impact is an undue pressure on foreign exchange.

In an indication that the impact of demonetisation and GST were not over, gold jewellery demand remained subdued in 2018 leaving traders, a core vote bank of BJP, miffed.

Sources said though the government will not go ahead with a steep duty cut on gold, it may reduce it by two percentage point in one go.

The gold policy is likely to focus on promoting the domestic gold industry and exports of gems and jewellery, which contribute about 15% to the total merchandise trade.

Government's policy think-tank Niti Aayog too had suggested slashing of GST rate and import duty on gold.

However, former Chief Economic Advisor Arvind Subramanian opposed the move to cut downgold import duty saying India's top 10% people consume more than 80% of country's gold.