Dubai: The newly enacted requirement that passengers flying into India will need to officially declare any gold jewellery valued at Rs10,000 (Dh592) and more could be a disincentive for the UAE and Gulf’s jewellery trade.
While the requirement does not immediately invite any new customs duties, it does create a layer of paperwork for expat Indians which will have them thinking long and hard about taking gold jewellery back to their home country.
“Indian authorities are effectively trying to de-link the Dubai jewellery trade’s status as a major source of the merchandise that is brought to India by expatriates,” said Cyriac Varghese, general manager at Sky Jewellery.
Some market sources worry that the customs form requirements could also be used as a tool for ‘harassment’ by customs officials if they so choose. As such, India already had in place a requirement that a woman passenger can only bring in gold and jewellery valued at Rs100,000 if customs duty was to be avoided. For a man the value is Rs50,000.
India went in for the sharp hike in import duty last year to tamp down domestic consumption and thus bring about some respite to the then widening current account deficit. But this brought in its wake a spike in gold smuggling routed through carriers who fly into the country’s many airports. While seizures of such contraband has been sizeable, there are real concerns that many of the carriers could have evaded the dragnet and make the gold available in the official channels. Those engaged in such activities can make handsome margins as long as bullion brought in through India’s official channels have an import duty of 10 per cent.
India’s stringent measures to curb domestic gold consumption started last year after import duties were revised upwards. It has paid off as latest World Gold Council date notes that India was pipped to the status of top bullion consumer by China in 2013, accounting for 975 tonnes against China’s 1,066 tonnes.
“Whenever official try to add to the paperwork, it does crate a negative sentiment with the intended group,” said Shamlal Ahmad, managing director of international operations at Malabar Gold and Diamonds. “While the new customs form replaces an outdated immigration paperwork, setting the base value at Rs10,000 does not accurately reflect gold values in the present.
“At Dh140-150 a gram for 22-carat, it does not take too much of weightage for a jewellery to be valued at well over Rs10,000.”
