Dubai: India might have signalled a rethink on scaling back its 10 per cent import duty on gold, but that will not be enough to upset the volume surge in Dubai’s jewellery trade, market source say. “There’s still a $100-125 an ounce premium on bullion availability in India and that in itself creates a sizable gap between the retail prices in that market and what is sold here,” said Cyriac Varghese at Sky Jewellery.
“Indian authorities had been sending out messages to the trade that there was a rethink on import duty, so it’s not as if it will come as a complete surprise.”
India imposed three duty hikes on bullion in a bid to stanch domestic consumption as well as the dollar outflow to fund the purchases. It has worked to an extent as imports dropped by a reported 90 per cent in the six months to November. But it also sparked an increase in gold smuggling by all means possible into the country, the consequences of which are still being borne.
