Sonia Nudges Government to Cut Gold Import Duty - The New Indian Express

Sonia Nudges Government to Cut Gold Import Duty

Published: 24th January 2014 06:00 AM

Last Updated: 24th January 2014 07:42 AM

After getting the government to raise subsidy bar for LGP cylinder from 9 to 12, comes the political nudge for a cut on gold import duty. Taking up the cause of gems and jewellery exporters, UPA Chairperson Sonia Gandhi on Thursday asked the government to see whether their demand to lower custom duties can be met.

The government did not seem ready to relent immediately without getting a firmer grip on the current account deficit (CAD).

Without directly asking for a lower import duties, Sonia in a letter to Commerce Minister Anand Sharma asked for “appropriate action’’.

“You are requested to kindly look into the matter (demands of the gems and jewellery industry) for appropriate action,’’ she said in her latter. The All India Gems and Jewellery Trade Federation had earlier written to Sonia demanding reduction in import duty on gold to 2% from 10% so as to encourage exports and curb smuggling.

The federation also demanded relaxation of the RBI rule disallowing inward shipments of gold unless 20% of the previous imports are exported, adding the rule has reduced imports and “broken the backbone’’ of the industry with erratic supply of gold.

What may have prompted Sonia to take up the issue with the government was that the federation’s argument that the curbs were not only affecting trade and industry, but also the artisans.

The moment the news of Sonia’s letter to the government hit the headlines, the industry perked up and there was surge in late trading on golds.

But sitting in Davos, Finance Minister P Chidambaram took a divergent view ruling out any immediate roll-back of the curbs on gold now in place. “Until we have a firm grip on CAD, I don’t contemplate any rollback of any measure,’’ he said. He even added that the government will get a full idea of CAD only when the interim Budget is presented in Parliament, which meets from February 5 to 21.

Sharma, who’s also in Davos, said,  “I’ve not seen that communication yet. I can’t comment on something that I have not seen, but what I know is that this 80:20 formula has been working well.’ He, however, kept the doors open for a possible roll-back saying that the government was open to discussion on the issue.

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