Budget 2019 Shocker: Gold custom duty hike is a double whammy for industry, says Malabar Gold & Diamonds Chairman Ahammed MP

While gold and jewelry industry was hoping for a relief in regards to import duty, the Budget 2019 shockingly did the opposite for them. On Friday, major shares like PC Jewellers, Titan Company, Thangamayil Jewellery, Tribhovandas Bhimji Zaveri and others saw massive selling pressure on Dalal Street. Finance Minister Nirmala Sitharaman presented the Budget 2019, where they made few hikes in indirect taxes like excise duty, custom duty, etc. This was led by crude oil price softening. 

In her Budget speech, Sitharaman said, "Crude prices have softened from their highs. This gives me a room to review excise duty and cess on petrol and diesel. I propose to increase Special Additional Excise duty and Road and Infrastructure Cess each by one rupee a litre on petrol and diesel. It is also proposed to increase custom duty on gold and other precious metals from 10% to 12.5%."

Talking about this, Ahammed MP, Chairman, Malabar Gold & Diamonds said, "The Finance Minister’s decision to hike the import duty on gold from 10% to 12.5% will be a double whammy for the gold retail industry, a segment which is critical for creating the much needed jobs for the economy. This is because on the one hand it will lead to a substantial increase in input costs of the industry sending the retail prices up and hitting sales."

On the other hand, the  Malabar Gold & Diamonds chairman also stated that, such will provide a stimulus for illegal shipment of gold into the country which will further hurt taxpaying players in the segment. 

Therefore, Ahammed MP said, "considering the critical role of gold industry in supporting economic growth and job creation as well as exports, the Government may reconsider this move. It is our long pending demand that the Government should lower the import duty on gold to 5% level to make illegal trade in gold unattractive”.