Gold Import Duty Cut to 6% Aims to Boost Jewellery Exports and Contain Smuggling

The recent Budget announcement to reduce import duty on gold is expected to enhance domestic manufacturing and boost jewellery exports, according to Commerce and Industry Minister Piyush Goyal. He mentioned that lowering the gold import duty from 15% to 6% will encourage the production of gold and silver jewellery while curbing smuggling activities.

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Goyal highlighted that the high gold prices make this move timely, especially with the upcoming marriage season. "The gold price we have is too far from the international prices, plus now the economy is in good shape. When the economy was in trouble, during Covid-19, we needed to put stronger curbs on gold imports. Now we are in a strong position, foreign exchange reserve is strong," he said.

Impact on Startup Ecosystem

The removal of angel tax is another significant decision aimed at strengthening the startup ecosystem in India. Goyal believes this will provide a substantial boost to new ventures across the country. "Duty reduction in gold and silver will result in employment and business growth. Value addition in gold jewellery will also boost exports, including e-commerce exports," he added.

Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2024-25, stated that reducing customs duties on gold and silver to 6% and on platinum to 6.4% would enhance domestic value addition in precious metal jewellery. This decision was made considering factors like the wedding season and aligning domestic prices closer to international rates.

Focus on Capital Expenditure

Goyal also pointed out that the Budget has addressed various societal segments. He emphasized that focusing on capital expenditure would have a multiplier effect on the economy by reducing logistics costs and boosting manufacturing and exports. "The idea is further simplification in terms of process and procedures and speed of approvals," he noted regarding foreign direct investment (FDI) announcements.

The government has announced plans to simplify rules and regulations for FDI to facilitate inflows. Goyal mentioned that some items might shift from government approval mode to automatic approval mode, streamlining the process further. "Maybe in some items, we could make it automatic approval mode instead of government approval mode. It's a mixed bag, there are many things...They will put it up with the finance minister, then the Prime Minister and then will go for Cabinet approval," he said.

Critical Mineral Policy

Addressing concerns about critical mineral policy and customs exemptions related to China, Goyal acknowledged India's dependency on these resources. "It is high on our needs. The entire world depends on China. If lithium doesn't come, then how will we increase EV mobility in India?" he questioned.

In summary, these Budget measures are designed to strengthen various sectors of the economy. By reducing import duties on precious metals and simplifying FDI regulations, the government aims to promote growth in manufacturing, exports, and startups while addressing critical resource needs for future development.