The gems and jewellery exporters on Saturday expressed disappointment over a significant increase in the import duty on gold and other precious metals saying the move would result in shifting of businesses to neighbouring countries.
Gems and Jewellery Export Promotion Council (GJEPC) Chairman Pramod Agrawal said: "We as an industry are greatly disappointed with the increase of import duty on precious metal, gold and silver".
He said that the sector is already going through very tough times with a decline in exports and job losses.
According to industry experts, the decision could lead to an increase in smuggling of the yellow metal in the country.
In Budget 2019-20, the government proposed to raise the import duty on gold and other precious metals from 10 per cent at present to 12.5 per cent.
Agrawal said they had, in fact, urged the government to cut the import duty as it is an important raw material for the sector.
The government's move "will result in the growth of business in neighbouring countries as the foreign tourists will stop buying jewellery from here and processing of larger diamonds will shift to competing countries like China, Vietnam," he said in a statement.
He added that exporters would again urge the government to review the decision.
World Gold Council India Managing Director Somasundaram PR has said the import duty hike will negatively impact India's gold industry and will impede efforts to make gold as an asset class, particularly when gold prices are already rising globally.
India is one of the largest gold importers in the world and the imports mainly take care of demand from the jewellery sector.
Gems and jewellery exports declined by 5.32 per cent to USD 30.96 billion in 2018-19.
The country's gold imports dipped about 3 per cent in value terms to USD 32.8 billion during 2018-19. Dip in the imports expected to keep a lid on the current account deficit.
Total imports of the precious metal in 2017-18 had stood at USD 33.7 billion as against USD 27.5 billion in 2016 -17 and USD 31.8 billion in 2015-16.