Budget 2015: Commerce Ministry seeks cut in gold import duty

NEW DELHI: The commerce ministry has pitched for a reduction in the import duty on gold in its budget recommendations to the ministry of finance to encourage gems and jewellery exports and manufacturing. “We have been asking for a cut in gold import duty,” commerce secretary Rajeev Kher said on the sidelines of a Confederation of Indian Industry (CII) event on Thursday.

The substantial decline in gold imports accompanied by the poor performance of the gems and jewellery sector prompted the commerce department to seek a cut in import duty that was raised to 10% from 2% in phases by the previous government to narrow the current account deficit.

Gems and jewellery exports contracted by 3.73% in January to $3 billion. Yellow metal imports have eased substantially after the government scrapped a rule last year that mandated traders export onefifth of the gold consignments imported into the country.

Gold imports in December declined sharply to 39 tonnes from 152 tonnes in November. The sector is among the 25 areas identified as part of the Make in India programme to boost manufacturing and create jobs. The government had raised the import duty on gold to contain the widening current account deficit.

In his address at CII's International Engineering and Technology Fair (IETF), Kher said the government will soon initiate the process for free trade agreement talks with Russia and Peru to enhance trade and economic ties. “In fact, joint study groups (JSGs) for both these countries have been already constituted and we believe that in the next three to six months, we will have reports of the JSGs and thereafter... the process of negotiating trade agreements will start,” Kher said.

Kher also said the new foreign trade policy (FTP) would be announced after the budget to give direction to India's efforts to enhance its engagement with trading partners. He said India is in the process of increasing its economic engagement with regions such as Latin America, Africa, South, West and Central Asia.