Budget 2015: Jewellers upset by status quo on gold import duty

MUMBAI: Jewellery company shares ended on a mixed note on Saturday after the government left the gold import duty unchanged, announced a monetisation scheme to harness idle household gold, proposed a sovereign gold bond to discourage physical buying of the metal and mandated PAN proof for any cash purchase above Rs 1 lakh.

While Titan, Gitanjali Gems, PC Jeweller and Shree Ganesh Jewellery House fell between 0.6 and 7.4%, Rajesh Exports, Shrenuj and TBZ gained 0.5 and 4.4%, respectively. Organised jewellers were especially disappointed as the government did not cut the 10% gold import duty which they had anticipated would be cut by 400 basis points. The duty was increased from 2% in stages in 2013 to ease pressure on the then widening current account deficit and the rupee.

However, high duty gave rise to smuggling, jewellers said. "Not cutting the duty will encourage parallel trade and affect organised players," said Mehul Choksi, MD Gitanjali Gems. A few jewellers who declined to be quoted said this along with making PAN card mandatory for any cash purchase above Rs 1 lakh and the likely incentivisation of credit and debit card use above a certain threshold would drive people towards the unofficial channel — i.e, jewellers and dealers who smuggle gold into the country.