Kerala Jewellers Call for Overhaul of Gold and Silver Import Duty Structure to Boost Industry

The Kerala Gold and Silver Merchants Association (KGSMA) has advocated for an urgent review and rationalization of the import duty structure on gold and silver. This call follows the government’s decision to increase import duties on these precious metals from 6 percent to 15 percent, which has been linked to a significant rise in smuggling activities. According to KGSMA, recent government data indicates a marked increase in both gold and silver smuggling, with seizure figures amplifying dramatically. The association highlighted that despite enhanced enforcement from the Customs Department and the Directorate of Revenue Intelligence, the elevated duties have incentivized illegal imports rather than discouraged demand.

This situation has profound implications for the common citizen and the broader market. Higher import duties have consequently elevated the costs of legal gold and silver, directly impacting consumers who are now faced with increased prices for jewelry and bullion. Moreover, legitimate traders are compelled to navigate an uneven playing field, grappling with escalated raw material costs while contending with competition from smuggled products that undercut market prices. Such dynamics could lead to reduced legal trade, which in turn affects government revenue streams, as fewer legal imports translate to diminished tax collections from this sector.

In terms of a long-term outlook, the KGSMA’s appeal to the government emphasizes the need for a balanced import duty policy that could mitigate the adverse effects of the current structure. A rationalized approach to import duties could potentially increase legal imports, bolster tax revenues, and ultimately contribute to a more regulated and transparent bullion and jewelry market. The government and the RBI may need to reassess their strategies regarding customs duties, aiming to strike a balance between safeguarding domestic industries and curtailing smuggling activities while ensuring a predictable and stable market landscape moving forward.

Source: The Hindu

(Expert Note: This report was independently prepared by the Wealthova Economy team.)