Author: Paul Ploumis29 Jan 2015 Last updated at 07:23:58 GMT
NEW DELHI (Scrap Monster): The Ministry of Commerce in India has sought significant cut in duty on gold and silver imports. It has also asked for reduction of Minimum Alternate Tax (MAT) on jewelry manufacturing units in Special Economic Zones (SEZs) within the country. The demands were put forward in its proposals forwarded to the Finance Ministry ahead of the financial budget. According to the Commerce Ministry, these measures would help boost the manufacturing sector and make jewelry exports more competitive.
The Commerce Ministry demanded that the import duty on gold and silver be brought down to 2% from the existing 10%. This will enable the gems and jewelry industry in the country to make handful contribution to the ‘Make In India’ campaign initiated by the new government. Consequently, the exports of gems and jewelry are likely to witness significant uptick. Incidentally, gems and jewelry sector accounts for 13% of the country’s overall exports.
The duty on gold had been at 2% during January 2012. But, in an attempt to bring Current Account Deficit (CAD) under control, the government had raised the gold import duty to 10% by August 2013 in a staged manner. The duty on Silver imports too was increased to 10% in Aug ’13. As a result, the gold and silver imports by the country tumbled nearly 40% over the previous year during 2013-’14.
Additionally, the Commerce Ministry noted that the current system of levying MAT is unworkable and called for thorough revision of the same. It recommended that the MAT on SEZ manufacturing units be reduced from 18.5% to 12%. It also called upon reduction in dividend distribution tax of 15% on SEZ developers.