Dubai: The Indian government should consider reducing import duty on gold from the UAE by another 1 per cent – and thus decisively strike a blow on ‘parallel imports’ into the country, according to top Indian jeweller.
“The CEPA deal between UAE-India already has seen import duty on gold from UAE drop by 1 per from 15 per cent – that was great,” said M. P. Ahammed, Chairman of Malabar Gold & Diamonds. “But if India can reduce by just another percentage, the government can seriously dent the impact of smuggled gold into India.”
Some of the biggest names in India’s gold and jewellery sector are expected to formally make the request with the authorities.
Apart from the 1 per cent import duty cut, the CEPA deal has India allowing up to 120 tons of gold be shipped in from the UAE over the last 12 months. This would then increased by an additional 20 tons each annually over the next 4 years.
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“The 1 per cent duty relief means a $20 an ounce saving for Indian gold importers,” said Ahammed, who was in Dubai for the opening of Malabar’s new international hub office at the Deira Gold Souk Ext.. “But, simultaneously, you have the ‘parallel shipments’ of gold where the savings translate into $30 an ounce.
“But the Indian government is actually losing out on import duties because of parallel shipments.
“This is why, it’s our request that another 1 per cent cut could clearly tilt the balance against all gold smugglers.”
The Indian authorities have introduced a series of schemes to counter movements of gold coming through illegal ways and then being sold in the country. New hallmarking standards have been set that jewellery retailers have to follow at all points. No gold other than those bearing the new hallmarking will be allowed in shops. If any retailer were to do it, that opens up heavy penalties. (Indian consumers holding gold is not affected by the hallmark changes.)
According to Ahammed, the gold trade in India and the UAE benefitted instantly from the CEPA. On the UAE side, it meant jewellers could bring in jewellery made in India here at 0 per cent import duty against the standard 5 per cent.
“That removal of 5 per cent has been one of the biggest boosts for India’s gold design and manufacturing and all those artisans who have decades of expertise making the most intricate jewellery,” he added. “This was a true breakthrough, because apart from entering the UAE, these jewellery had a chance to reach a bigger global market – at much reduced costs.