Friday, February 26, 2010

Budget takes the sheen off gold, silver, platinum

Glitters no more: Gold jewellery displayed for sale at a retail shop in Kochi. Consumers will have to pay more for gold and silver with the hike in Customs duty. –
For those who value gold either for jewellery or as investment, the Budget has given them a nasty surprise. The Finance Minister, Mr Pranab Mukherjee, has proposed to hike the Customs duty on gold and platinum imports by Rs 100 for 10 gram to Rs 300. For silver, the duty has been increased by Rs 500 to Rs 1,500 a kg.
The hike has come at a time when the industry has begun to witness a revival in gold imports from January even as precious metal prices have turned volatile in the recent months.
Gold imports declined sharply last year. In 2009, gold imports declined 19 per cent to 339.8 tonnes from 2008 on the back of record prices, according to Bombay Bullion Association data.
Gold import in January rose to 37 tonnes against 27 tonnes in December. It was 30 tonnes in November. In October, however, gold's arrival into the country was 48 tonnes on good demand from retail jewellers.
Mr Vasant Mehta, Chairman, Gems and Jewellery Export Promotion Council, said the local consumption of gold and silver jewellery may go down owing to the increase in excise duty and this in turn may affect the skilled workers from the sector.
“The cost of manufacturing would increase as compared to the competitive countries as the government has not extended the two per cent subvention to the industry and affect the exports from the country,” he said.
Mr Prithviraj Kothari, Chairman, Riddhi Siddhi Bullions, said the demand for gold has already halved due to high prices and imports are expected to come down in the coming months.
Sop for Rhodium
The government has reduced customs duty on rhodium – a precious metal used for polishing jewellery – to two per cent from 10 per cent.
The Finance Minister, Mr Pranab Mukherjee, said: “To encourage domestic refining capacity for gold, I propose to reduce the basic customs duty on gold ore and concentrates from two per cent ad valorem to a specific duty of Rs 140 for 10 grams of gold content with full exemption from special additional duty.” Further, the excise duty on refined gold made from such ore or concentrate is being reduced from eight per cent to a specific duty of Rs 280 per 10 grams.
Mr Mehul Choksi, CMD, Gitanjali Group, said the reduction of duty on rhodium and raw gold is a welcome move.


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