Gold jewellery exports come to a halt
Export of gold jewellery from India has stopped in the past two weeks due to non-availability of the metal for fabrication.
Trade sources said banks and nominated agencies that are responsible for bullion import have halted the bringing in of gold since implementation of the goods and services tax (GST) effective July 1. They fear the government’s decision to levy three per cent GST on bullion and jewellery with full input credit would hurt their profitability and block working capital on every gramme of gold they sell.
With reduced supply, jewellery manufacturers have stopped their production, also halting export, save those with some input stock. Significant, as gold jewellery is nearly 18 per cent of the overall annual gems and jewellery export of $40 billion and employing nearly a million skilled and unskilled workers, directly and indirectly.
“Banks and nominated agencies have halted bullion import,” stated Sabyasachi Ray, executive director, Gems and Jewellery Export Promotion Council. A senior official of a leading bullion importer said on condition of anonymity, “In the pre-GST regime, we paid only the import duty of 10 per cent on gold, passed on to consumers. We would stay away from importing as capital will be blocked for paying IGST.”
Representatives of banks and nominated agencies have expressed their concerns to the ministry of finance and urged that they recommend the GST Council find a solution. The official further said, “We will not resume gold import till the government assures us to compensate the notional loss, as we import gold and sell to our consumers sometimes in a fortnight.” Gold jewellery exporters have also been hit since early this year due to levy of five per cent import duty in West Asia from January 1. Many Indian jewellery exporters were using Dubai for re-routing consignments to European and African countries and their shipment there has declined sharply.