India raised import duty on gold jewellery on Tuesday from 10 per cent to 15 per cent, a move that is expected to have immediate ramifications in the UAE, the most sought-after jewellery shopping centre for Non-Resident Indians (NRIs).
India’s Ministry of Finance on Tuesday set duty on jewellery higher than the 10 per cent levied on raw gold in a move to protect the domestic jewellery industry.
“To protect the interests of small artisans, the customs duty on articles of jewellery … is being increased,” the ministry said.
The government has also curbed raw gold imports through measures including three duty hikes this year to a record 10 per cent. The Reserve Bank of India has put tight restrictions on importers that have sharply curtailed supplies.
India imported gold jewellery worth $137.57 million in the four months from April to July this year — a fraction of overall bullion imports, which were $2.9 billion in July alone.
For Dubai’s jewellery retailers, who have been hoping for a big sales boost with the advent of the festival season in India, the move came at the right time. Shamlal Ahmad, Managing Director International Operations, Malabar Gold, a leading jewellery chain in the GCC and India, said NRI consumers and local jewellery trade would stand to benefit from the raised duty as a substantial price gap has been building up between prices in the UAE and what the same would cost in India since New Delhi started to raise duty as part of a series of curbs to slash its widening current account gap and support a weak rupee.
Precious metal analysts in Dubai said while Indian jewellery fabrication, which jumped by 25 per cent in the first half to almost 350 tonnes, will get a boost while it will also have positive implications on Gulf’s gold jewellery business with NRIs rushing in to exploit the more attractive price advantage here. Dubai’s tax-free status has made it one of the cheapest places to buy gold in the world.
The hike in import duty on jewellery had been a demand from the industry to ensure the viability of the domestic jewellery manufacturing, and avoid imports of cheaper jewellery from the GCC, Thailand and Malaysia.
All India Gems and Jewellery Trade Federation hailed the move as very positive for the local industry and hoped it will support the jewellery-manufacturing sector.