Gold ore import duty may be cut to 2%

The Centre is likely to reduce the duty on gold ore from the current five per cent and bring it at par with the finished product which is taxed at roughly two per cent.

Further, it is also expected to make trading through the special economic zone (SEZs) more market driven.

The steps are expected to boost the bullion industry.

"Currently the import of pure mine concentrate is taking place at a very low level because of the high duty differential. Once this is pared, it would reduce the cost for refining and there will be more incentive for people to opt for this rather than importing finished gold directly," said bullion consultant Bhargava N Vaidya.

The differential between the raw material and finished product already stands reduced for other metals like copper and steel.

Besides, the government is also expected to remove restrictions on trade through SEZs and make it more market driven.

With the restrictions gone, units making bars and coins which exported goods worth Rs 5000 crore in the last fiscal was expected to boost exports. India was a globally cost-competitive manufacturer of coins.

According to Vaidya, growth in bullion export was expected to remain at roughly five per cent as the US market was still dull. Last year, 60 per cent of the total Indian jewellery was exported to USA.

West Asia, including Saudi Arabia and Kuwait, was also not buying more owing to regional conflict.

The total import of bullion into India in 2003-2004 stood at Rs 31326.69 crore, up 50.95 per cent over the previous fiscal. Gold was imported at a fixed rate of Rs 10,000 per kilogram.