Surat. The Gem and Jewellery Export Promotion Council (GJEPC) has expressed serious concern over the government's decision to increase the gold import duty from 5 percent to 10 percent and the agricultural cess from 1 percent to 5 percent.
The council stated that it is fully committed to Prime Minister Narendra Modi's call for 'Nation First', but there are fears that the increase in duties will negatively impact the industry, especially the MSME sector. GJEPC reported that a letter has been sent to the Prime Minister after a recent meeting with major jewellery retailers and manufacturers, detailing the steps being taken by the industry to reduce gold imports and enhance self-reliance. The council mentioned that promoting lower-carat jewellery, such as 18-carat and 14-carat jewellery, could reduce gold imports by 20 to 30 percent.
Additionally, consumers will be encouraged to create new jewellery in exchange for old gold, which will decrease dependency on imports. GJEPC has also demanded the re-implementation of the 'Gold Monetization Scheme' (GMS) in a more practical form to better utilize the approximately 25,000 tons of gold reserves in the country. The council also mentioned discouraging investment in gold bars, billets, and coins, as they account for 20 to 30 percent of total imports.
The council stated that in the current economic conditions, special incentives should be provided to gold jewellery exporters to help them earn more foreign exchange. GJEPC has informed that it will also submit a detailed proposal to the government regarding the revival of GMS. However, the council clarified that it has always believed that increasing import duties does not reduce gold imports; rather, it leads to price increases and promotes smuggling.
According to GJEPC, despite gold prices doubling in recent years, imports have not decreased in the same proportion. The council also reported that exporters now have to provide bank guarantees of up to 28 to 30 lakh rupees per kilogram to 'designated agencies' for duty-free gold, which is putting significant pressure on their working capital and affecting export business. GJEPC warned that this policy will have the most impact on MSME manufacturers, who are considered the backbone of the industry.
Approximately 80 percent of the council's total membership is from the MSME sector, which is currently facing a severe cash crisis. The council urged the government to seek long-term and balanced solutions that can safeguard fiscal goals along with export growth and industry competitiveness.
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