(Kitco News) – India has raised the import duties on gold and silver findings, coins, and spent catalysts containing precious metals by 50%, the government announced on Tuesday.
According to the Finance Ministry, the import duty on precious metals findings and coins will now be 15%, up from 10% previously, and the new rate is in effect as of Jan. 22. The Ministry said the measure was taken to eliminate the tax advantage of importing gold and silver in the form of findings rather than in bars, which already had 15% duty charges.
‘Findings’ are small components such as hooks, clasps, clamps, pins, catches, and other fasteners used to assemble jewelry.
The Ministry also raised the import duty on spent catalysts containing precious metals to 14.35% from 10%. Spent organic-based catalysts containing precious metals are incinerated to recover their gold and silver content.
A Finance Ministry official said that the move was made to prevent importers from circumventing the higher duty on gold and silver bars after they noted a surge in imports of gold findings over the last two months.
“The imposition of [additional duties] on Gold and Silver Findings is to bring them at parity with the overall customs duty rates on gold and silver,” said Gunjan Prabhakaran, Partner with BDO India.
India is the world’s second-largest consumer of gold, and unlike world number-one China, which is also a leading gold producer, India’s massive jewelry industry is almost entirely reliant on imports of precious metals.
Kavita Chacko, Research Head for India at the World Gold Council, noted in December that high gold prices in India and around the world are impacting demand. “Despite the busy wedding season, anecdotal evidence suggests that purchases have been lower than in recent years,” she wrote. “Jewellery sales volumes seem to have taken a hit and store footfalls has reportedly reduced since the peak festive period (Diwali). Reports suggest that the high gold price has also limited the appetite of jewellers to build their inventories.”
Chacko said that consumers appear to be buying gold to meet wedding-related needs “but are otherwise largely staying away from discretionary purchases.” She also noted an uptick in jewelry recycling which could reduce imports.
“Looking ahead, jewellery demand may find it difficult to rebound while the high price environment remains,” Chacko said. “At the same time, investment demand for gold is likely to get a boost, supported by the favourable domestic economic growth prospects and the trend of growing domestic investment inflows amidst the prevailing global geo-political and economic uncertainty.”
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