Cut gold import duty to 5% to curb gold smuggling: Assocham.

KOLKATA: The livelihood of over 75 lakh jeweller families in West Bengal (WB) is threatened due to heavy custom duty on gold imports resulting in a minimum 7-10 days delay in procurement of the yellow metal, Assocham's Eastern Region Gems and Jewellery Council chairman, Shankar Sen said.

On behalf of The Associated Chambers of Commerce and Industry of India (Assocham), Sen has suggested that the government reduce the duty on imported gold to five per cent to check unprecedented surge in gold smuggling from Nepal and Bangladesh that have emerged as transit points for smuggling the yellow metal into India.

"There is an urgent need to cut import duty on gold by five per cent from existing 10 per cent in wake of increasing instances of the precious metal being sneaked into India through its porous borders with Nepal and Bangladesh," said Sen.

"Gold smuggling is becoming lucrative for offenders by the day as smuggling one kilogram of gold leads to net savings worth over Rs 1.5 lakh while through legal channel it takes over a week to import this much of gold."

"Gold import duty in both Nepal and Bangladesh is as good as nil, besides, even authorities in both Kathmandu and Dhaka are not that watchful to clamp down on such malpractices," Sen said, while citing reasons for rise in gold imports from India's neighbourhood countries.

"Bangladesh, Myanmar, Nepal, Pakistan and Sri Lanka have witnessed significant surge in gold imports more so, since Indian government imposed restrictions on its imports, while China has surpassed India thereby becoming world's largest gold importer."

With a view to provide relief to the domestic gems and jewellery industry, Assocham has urged the finance ministry to ease the existing restrictions thereby reducing the customs duty rate on gold from current 10 per cent, easing the 80:20 rule which requires at least a fifth of imported gold to be exported or reinstating the gold-on-lease model which allowed credit purchases of imported gold.

Assocham has also urged the government to introduce strict punishment on gold smuggling as reportedly even people with sound background are smuggling gold owing to the fact that they can make the most of profitable margins.

While India's gold imports have come down by a whopping 95 per cent since August 2013 when the import duties were raised, the imports through illegal channels have almost doubled to about two hundred tonnes.

Last year, gold worth about $9 billion was imported into India through the black market. Considering that India's current account deficit has started contracting and with gold smuggling on rise, ease in import curbs is soon expected.

Source : timesofindia.indiatimes.com