Decreasing duty on gold will increase the work of making jewellery at home

MUMBAI: Some of India's top jewellers having stores in Dubai believe that with a significant cut in import duty on gold in the current fiscal year's budget, Indian gold consumers and traders may see a sharp drop in gold purchases from Dubai. Home-based jewellery manufacturing is expected to increase.

India's gold and silver imports from the United Arab Emirates (UAE), with which India has a free trade agreement (FTA), grew 210 per cent year-on-year to $10.70 billion in FY23-24.

However, there is a provision for zero duty on gold imports from the UAE after three years under the free trade agreement. Since jewellers will no longer benefit from the current low duty on gold imports from Dubai under the free trade agreement, imports are likely to decline. Import duty on gold and silver has been reduced to 6 per cent in the current fiscal year's budget. With the reduction in duty, domestic prices will come down significantly, making it futile for local traders and consumers to travel to Dubai to buy jewellery.

Fifty percent of the UAE's jewellery trade is expected to come to India.

It is expected that with the fall in gold prices, the work of making jewellery at home will increase and the artisans will also get employment.

Since labour cost is cheap in India, jewellers are expected to benefit here too.