Gold jewellery imports may attract 4% countervailing duty
The finance ministry is considering levying four per cent countervailing duty (CVD) to protect the domestic gold jewellery industry from the glut of ready-made ornament imports through Thailand.
Import of gold currently attracts a levy of four per cent and around 0.75 per cent of administrative cost incurred at banks, taking the total cost of import to 4.75 per cent. Against that, import of ready-made gold ornaments from Thailand attracts just one per cent duty, as India has signed a Free Trade Agreement (FTA) with the country.
The significantly lower import duty on finished products has lured Indian jewellers to opt for import of ready-made gold ornaments from Thailand. However, import of ready-made ornaments will not only hit the domestic gold jewellery manufacturing sector, but also threaten the job security of artisans in this industry.
The proposed CVD equivalent to the import duty, however, will help reduce import of ready-made jewellery from Thailand, as import of gold jewellery under FTA will now attract five per cent overall duty (four per cent CVD plus one per cent customs duty) as against the 4.75 per cent currently levied.
We had brought the duty difference problem to the notice of Finance Minister Pranab Mukherjee and suggested imposing four per cent CVD on jewelery imports from Thailand as the only solution.
He had assured us he would be looking into the matter. Our sources have confirmed the ministry is considering it," said Rajiv Jain, chairman of the Gems & Jewellery Export Promotion Council (GJEPC), the apex trade body under the Union commerce ministry, with 5,500 members.
The body handles issues related to jewellery export and import. Thailand is not known as a jewellery producer. Therefore, most of the imports actually originate from China and Malaysia and are routed through Thailand.
However, Thailand is an emerging export market, seeking to diversify its growing foreign exchange reserves and mitigate risks against the backdrop of rising US and European debt concerns. According to Sanjay Kothari, vice-chairman of GJEPC, "The difference between gold and jewellery import through Thailand is huge, which needs to be corrected."
In March, a finance ministry official had indicated a six per cent CVD would be levied on import of gold jewellery from Thailand. All India Gems & Jewellery Trade Federation (GJF), Chairman, Bachhraj Bamalwa, said the government's move would curb gold ornament imports through Thailand.
He, however, fears the signing of more FTAs with European countries, as recently hinted by the government, would paralyse the Indian jewellery industry.