Cut gold import duty, form jewellery parks: Niti Aayog Panel

NEW DELHI: A Niti Aayog committee suggested lowering of the import duty on gold, setting up of jewellery parks to encourage local manufacturing, making mining viable and “financialisation” of the metal’s holding among steps to transform India’s gold market.

The committee, headed by Aayog principal adviser Ratan P Watal, also highlighted the need for a regulatory body for the gold industry, as it made 84 recommendations clubbed under 20 heads, with a three month to one-year timeline for implementation.

According to the committee, tax policies should be so designed that it enabled migration of the largely MSME sector to an organised sector. “These can be achieved by taking a decision on rationalising the import duty on gold and gold doré, as that would remove the arbitrage between Indian and international gold prices thus dis-incentivising smuggling,” it said.

“It will get a parity of pricing of Indian and the global jewellery, just making the exports competitive on prices,” the panel said. The government currently levies an import duty of 9.35% on gold doré. According to the committee, financialisation of gold and incentivising digital payments will bring about transparency in transactions and contribute towards India’s savings rate.

“Financialisation of gold is to integrate existing above-ground stocks of gold into the financial system and real economy. Secondly, it will ensure that all future investment demand for gold is made in financial products that are backed by gold and not held as physical gold. Third, it will ensure that the economic value of an individual’s gold holdings are realised (e.g.: loan against gold jewellery).”

Commenting on ‘Make in India in Gold’ initiative, the committee said it would be desirable to include gold as one of the industries under Tier 1of the Make in India initiative. “Mining of gold should be actively pursued to the extent there are considerable gold reserves available in India. “This would create additional employment in rural areas, add to domestic supply of gold and reduce the extent of gold that needs to be imported,” it said.

Secondly, the gold refining and recycling industry needs to be incentivised as India has a cost advantage and can support refining for both domestic and global requirements, it suggested. Translation of the vision requires development of clusters, jewellery parks and common facility centres which would assist the development of the industry dominated by MSMEs, the committee said.