Gold duty hike to push export cost, block working capital: Exporters, Pg15

Key Highlights:

• The government increased the duty on gold imports to 15%.
• Gems and Jewellery Export Promotion Council (GJEPC) said this move will hurt export shipments.
• Exporters will face bank guarantees of Rs 28-30 lakhs per kg of duty-free gold.
• MSME manufacturers, accounting for 80% of GJEPC's membership, will be severely impacted.
• West Asia accounts for 18% of India's total diamond exports.

Detailed Insights:

• The hike in import duty on gold is expected to inflate prices and fuel smuggling, rather than curb imports.
• Increased bank guarantees for duty-free gold will block working capital and stifle exports, especially for MSMEs.
• The gems and jewellery sector is already facing uncertainty due to trade disruptions in West Asia.
• A significant portion of India's rough diamond imports originate from the UAE and Israel.
• This policy change risks undermining the competitiveness of the gems and jewellery industry at a critical time.

Key Concepts Involved:

• Import Duty: A tax imposed on goods imported into a country.
• Working Capital: The capital available for a company's day-to-day operations.
• MSME: Micro, Small and Medium Enterprises, which are important for economic growth and employment.