Duty drawback rates for gold, silver jewellery exports surge

The Union ministry of finance has announced a sharp increase in duty drawback rates for gold and silver jewellery with effect from Saturday.

On Friday night, the ministry issued a notification in this regard. The move is expected to increase viability of jewellery exports for those who opt for the drawback route.

The duty drawback amount has been increased from ~272 to ~372.9 per gram for gold jewellery. Earlier, it was covering 63.27 per cent of the import duty paid which has gone up to 86.74 per cent. And for silver jewellery, drawback rates have been increased from ~3,254 to ~4,332.2 per kg. It covers 83.53 per cent of the duty paid from the earlier 62.74 per cent. Calculations are based on the current tariff value.

Surendra Mehta, national secretary of the Indian Bullion and Jewellers Association (IBJA), said, “Duty drawback is now almost 87 per cent of the duty amount and earlier it was 63 per cent. Lower drawback has been affecting our exports. Increase in this is an extremely positive step towards export of gold and silver jewellery for those who opt for the scheme. Exports were affected after gold and silver prices started rising and the government also raised duty and tariff of the two precious metals but did not increase duty drawback.”

Export of gold jewellery from the country is $1 billion per month. For gold and silver jewellery exports, two other routes are also available. One is replenishment and the other is importing gold under the advance authorisation scheme. However, a month ago, the government had said that advance authorisation will not be issued where items of export are gold medallions and coins or any jewellery/articles manufactured by a fully mechanised process.

This advance authorisation scheme allows exporters to import gold duty free for export purposes. Since there were reports of the scheme being misused, the government restricted its use as it would hurt genuine exports. This also seems to have acted as a trigger to increase drawback rates.

IBJA also wrote to the government in August about unviability of exports as rates were quite low. This anomaly has largely been corrected now.

Responding to the move, Colin Shah, vice-chairman of Gem and Jewellery Export Promotion Council, said, “This will especially benefit small exporters for whom gold is not available in small tranches and also small town exporters, who do not have access to duty free gold. As a policy, the Centre should encourage exporters to adopt the duty drawback route as it helps all and thus broad bases the exports. However, the full duty benefit is not available through the drawback route. Our demand to the government is to refund the import duty at the rate which is prevalent on the day of exports.”