Mumbai, May 13 (PTI) Gems and jewellery retailers on Wednesday said imposing quantitative restrictions on gold and silver imports, rather than raising import duties, would be a more effective way to curb the country's current account deficit (CAD).
According to industry players, increasing import duties often drives up prices in the domestic market, hurts small and medium-sized enterprises, whereas alternative measures such as import quotas or licensing limits on gold and silver would be more effective.
PNGS Reva Diamond Jewellery CEO Amit Modak said the government should have imposed quantitative restrictions on gold and silver imports rather than increasing import duties.
"The quantitative restrictions could have helped in the overall reduction of imports and also save foreign exchange, he told PTI.
Further, Modak said the recycling of old gold and silver, held by people, should be encouraged and incentivised.
On Wednesday, the government hiked import duties on gold and silver to 15 per cent from 6 per cent as part of measures to curb inbound shipments of precious metals amid a rising import bill due to the West Asia crisis.
Meanwhile, jewellery retailer Senco Gold and Diamonds MD and CEO Suvankar Sen said the import duty would remain high amid the West Asia crisis. Moreover, crude oil prices will remain elevated till oil supply chain becomes stable.
"So maybe it shall stay at these levels for around one year. Volumes might be impacted by 10-15 per cent, but value-wise, they will remain at a higher level. Consumers will buy lighter-weight jewellery," he added.
Prime Minister Narendra Modi on Sunday made a clarion call for curbs on gold purchases, along with other austerity measures to save on foreign exchange. The government has hiked the social welfare surcharge (SWS) and the agriculture infrastructure and development cess (AIDC), effective May 13. The duty hikes will raise the overall customs duty on gold to 15 per cent.
According to Dhirsons Jewellers Director Raghav Dhir, the revision in import duty is a significant policy shift, and while it will inevitably push up costs across the supply chain, it also presents a timely opportunity for consumers to rethink how they engage with gold.
"We strongly encourage our customers to bring in their old gold and exchange it for new jewellery. This is one of the smartest ways to stay ahead of rising prices while refreshing your collection. At the same time, we believe this is the right moment for the industry and the government to come together and formalise a robust gold monetisation scheme," he stated.
India holds an estimated 25,000 tonnes of gold sitting idle in homes. Unlocking even a fraction of that through a credible, consumer-friendly programme would reduce our dependence on imports, ease forex pressure, and fuel domestic trade meaningfully, he said.
He added that the policy intent is clear -- "what we need now is a structured mechanism that gives consumers the confidence to participate".
Malabar Group Chairman M P Ahammad said India possesses one of the world's largest privately held gold reserves while continuing to rely significantly on imports to meet domestic demand.
"We wholeheartedly support the Prime Minister's appeal and believe that encouraging responsible utilisation, recycling, and circulation of existing gold within the country is an important national priority.
"With appropriate policy support and active integration of the organised jewellery sector, the Gold Monetisation Scheme can emerge as a highly effective mechanism for mobilising idle gold into the formal economy," he added.