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Bullion cos welcome gold scheme, unhappy over duty status quo

Mumbai: Gems and jewellery players today said the gold monetisation scheme annunced in the Union Budget will increase the supply and help in reducing imports of the precious metal.The industry players, however, expressed disappointment over

PTI [ Updated: February 28, 2015 18:38 IST ]
bullion cos welcome gold scheme unhappy over duty status quo
bullion cos welcome gold scheme unhappy over duty status quo

Mumbai: Gems and jewellery players today said the gold monetisation scheme annunced in the Union Budget will increase the supply and help in reducing imports of the precious metal.

The industry players, however, expressed disappointment over no reduction in customs duty on the metal.

“We are very happy with the proposal of gold monetisation scheme. This is similar to the ‘Rastra Swarna Nivesh' scheme we had proposed last year. This will increase the supply and help in reducing imports,” Gems and Jewellery Trade Federation (GJF) Chairman Haresh Soni told PTI here.

It will also help the Government to keep the current account deficit (CAD) under check, he said.

However, it is disappointing to see there was no reduction in import duty on gold. The industry was expecting the Government to reduce the duty from the current 10 per cent as CAD is under control at 1.3 per cent of GDP, he said.

Gem and Jewellery Export Promotion Council (GJEPC) Chairman Vipul Shah said the gold monetisation scheme will channel the precious metal into the financial system.

“The scheme will bring the precious metal into the system. But we have to see how this scheme is incorporated going forward,” he added.

To curb gold imports and monetise large idle stocks of the precious metal, Finance Minister Arun Jaitley today announced three schemes, including redeemable gold bonds which will carry a fixed rate of interest.

However, Shah said the export industry is disappointed over no proposals on Special Notified Zone (SNZ). Somasundaram PR, World Gold Council Managing Director- India, described the Budget as “exceptional”.

“The introduction of an India branded gold coin will enhance gold's economic value. This announcement will have a healthy impact on the gold sector, but this can be realised only if trade is liberalised without artificial curbs through higher duties and other forms,” he said.

The monetisation scheme will drive orderly recycling and enhance transparency, benefiting millions of households and the macro economy, as it has the potential to translate gold savings into economic investments, Somasundaram said.

India will now be able to set in place a measured monetisation framework for gold from the existing stocks in private hands worth over USD 1 trillion, he said.

Tara Jewels Chairman and Managing Director Rajeev Sheth opined the Government has definitely addressed the needs of the Indian gold jewellery industry in the Budget.

“The proposal to develop a sovereign gold bond, to introduce a gold monetisation scheme and India made gold coins will all ease the supply of gold in the domestic market.”

Gitanjali Group CMD Mehul Choksi termed the monetisation scheme as positive. However, not reducing the import duty and making it mandatory to quote PAN for purchases above Rs 1 lakh is negative for the industry.

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