All India Gems and Jewellery Trade Federation (GJF) chairman Bachhraj Bamalwa said the organisation has submitted its recommendation to reduce the import duty on gold from the existing four percent to two percent.
"Now, there is news that the government plans to increase the import duty on gold from four percent to five percent," he said.
Bamalwa said that in the last budget (2012-13), the import duty was hiked from one percent to four percent, which led to an increase in gold smuggling activity.
"Gold worth Rs.942 crore was seized during a brief period of three months and further increase in import duty will encourage smuggling. The income generated from these activities might be used in various illegal activities, threatening national security as well as to destabilize the overall Indian economy," Bamalwa said.
He added that despite a steep hike in the import duty, around 600 tonnes of gold imported in the first three quarters of the current fiscal, the country's trade gap has not reduced and the forex reserves have depleted.
Bamalwa said that Indian households hold an estimated 25,000 tonnes gold since generations, which the government must try to bring out and utilize it by lending to jewelers at nominal rates of interest.
The GFJ chief said that even if 10 percent of this domestic household gold was brought out under an amnesty scheme and lent to jewelers as working capital, the country would not require to import any gold for at least three years, help balance the trade gap and also bring down gold prices.
In this regard, Bamalwa sought a ban on banks selling gold coins which again becomes idle investment for years as also trades in ETF, e-gold and gold mutual funds backed by physical gold till the country's trade deficit reduces to satisfactory levels.
The GJF encourages promotion and growth of trade in gems and jewelery across India through its over 300,000 members comprising manufacturers, wholesellers, retailers, distributors, laboratories and allied services.
