Budget 2024: Government Proposes Significant Cuts in Customs Duty on Precious Metals

New Delhi, July 23, 2024 – The Indian government has announced a series of significant reductions in customs duties on precious metals as part of its Budget 2024, unveiled by Finance Minister Nirmala Sitharaman. In a move aimed at boosting the jewelry sector and making precious metals more affordable for consumers, the customs duty on gold and silver has been slashed to 6%, while the duty on platinum has been reduced to 6.4%.

Key Announcements:

1. Gold and Silver:

   • The customs duty on gold and silver has been reduced from the previous rate to 6%.
   • This reduction is expected to lower the prices of these metals, making them more accessible to consumers and bolstering the jewelry industry.

2. Platinum:

   • The customs duty on platinum has been cut to 6.4%, down from its earlier rate.
   • The move is anticipated to stimulate demand for platinum jewelry and investments.

Rationale and Impact:

The finance minister emphasized that these measures are part of a broader strategy to support the domestic jewelry industry, which has been facing challenges due to high import duties and fluctuating prices. By reducing the customs duty, the government aims to:

• Boost Domestic Consumption: Lowering the cost of gold, silver, and platinum is expected to spur consumer demand, particularly during festive seasons and wedding periods, which are traditionally high-demand times for jewelry.

• Support Jewelers and Artisans: The reduction in customs duty is likely to benefit jewelers and artisans, as it will lower their raw material costs, potentially leading to more competitive pricing and higher sales volumes.

• Curb Smuggling: High import duties have historically led to an increase in smuggling activities. By making legal imports more attractive, the government aims to reduce illicit trade and increase revenue from legitimate imports.

Industry Reactions:

The announcement has been met with widespread approval from various stakeholders within the industry. The Gem and Jewellery Export Promotion Council (GJEPC) welcomed the decision, stating that the reduction in customs duty would provide much-needed relief to the sector.

”We are thrilled with the government’s decision to reduce the customs duty on gold, silver, and platinum. This move will significantly enhance the competitiveness of the Indian jewelry industry and help us regain our position as a global leader,” said Colin Shah, Chairman of GJEPC.

Economic Considerations:

The reduction in customs duty is also seen as a strategic move to manage the current account deficit. Precious metals constitute a significant portion of India’s import bill. By encouraging legitimate imports at lower duties, the government aims to balance the demand for foreign exchange while ensuring that the industry benefits from lower costs.

Conclusion:

The Budget 2024 announcements on customs duties for precious metals mark a significant shift in the government’s policy towards supporting the jewelry sector and managing the broader economic impact. As the industry gears up to take advantage of these changes, consumers can look forward to more affordable prices for gold, silver, and platinum jewelry in the coming months.