Gems and Jewellery Export Promotion Council (GJPC) today renewed its demand to restore the import duty on gold to the earlier level of 2 per cent from the current 10 per cent on the ground that the move will help in eliminating rampant smuggling of the yellow metal.
The apex trade body in its letter to Finance Ministry said the reduction in the duty will also reduce the transaction cost of exports.
"Since the imposition of 80:20 scheme, the desired curb in the total import of gold has now been duly achieved. So the import duty should be rolled back to much lower rate, say 2 per cent," GJEPC said in the letter.
The government in its bid to reduce the widening Current Account Deficit (CAD) increased the imports duty on gold to 10 per cent in a staggered manner from 2 per cent earlier.
The gems and jewellery sector, which is the second largest sector contributing to the Indian economy has posted drop in the exports since last 12 months, the Council said, adding, "the growth has taken a beating by the government and central banks steps to curb gold imports to help reduce current account deficit."
The Council had for the first time taken up the issue with the government late January this year.
Stating that a higher import duty has led to increase of grey market, the Council reasoned that, "If the import duty is rolled back then the menace of gold through smuggling route will not be any more productive and hence the leakage will be prevented."
If the duty is decreased it will help in reducing the transaction cost of exports in and the exporter will not be required to block his fund of as high as 10 per cent till the inward remittance does not come, GJEPC added.
