The Indian government has announced a significant reduction in the drawback rates for gold and silver jewellery exports. This move follows a substantial cut in import duties on these precious metals as detailed in the latest Budget.
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A notification regarding this was issued by the Department of Revenue. | Photo: Bloomberg
Government Cuts Drawback Rates for Gold and Silver Jewellery Exports
The Department of Revenue has issued a notification that significantly lowers the drawback rates on gold and silver jewellery exports. This adjustment is a response to the major reduction in import duties on these precious metals introduced in the recent Budget.
Previously, the export drawback rate for gold jewellery was Rs 704.1 per gram of net gold content in the article. This rate has now been slashed to Rs 335.5. Similarly, the rate for silver jewellery and articles has dropped to Rs 4,468 per kilogram of net gold content in an article.
Understanding the Duty Drawback Scheme
To explain, the Duty Drawback Scheme offers refunds of import duties and internal taxes paid while importing goods. These imported goods are often used to manufacture products that are then exported. This scheme aims to reduce the overall cost burden on exporters and make their products more competitive in the global market.
Reduction in Import Duties
In the latest Budget, the import duty on gold and silver was significantly lowered from 15% to just 6%. This major reduction aims to benefit the gems and jewellery sector by making raw materials cheaper.
Ajay Sahai, Director General of the Federation of Indian Export Organisations, commented on this decision. He stated, “The duty drawback on gold and silver jewellery was reduced as the duty on gold and silver lowered in the budget.”
Impact on Gems and Jewellery Exports
However, it’s worth noting that the gems and jewellery sector has been facing challenges this fiscal year. From April to July, the exports of gems and jewellery have contracted by 7.45%, amounting to USD 9.1 billion.
This significant drop in exports indicates the difficulties the sector is experiencing despite the government’s efforts to reduce the burden through lower import duties and adjusted drawback rates.
Experts suggest that other global economic factors, including fluctuating demand and international trade policies, may be contributing to the contraction in export volumes.
Looking Ahead
It will be interesting to observe how the reduced drawback rates and import duties will affect the gems and jewellery sector in the coming months. The government’s hope is that these measures will stimulate growth and help the industry regain its footing amidst the current economic uncertainties.
To conclude, the government’s recent announcement represents a crucial policy shift aimed at bolstering the competitiveness of Indian jewellery in the global market. While immediate impacts show a contraction in export figures, there is cautious optimism that these steps will foster long-term growth and stability for the sector.
