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The gold demand of India fell by 24% in third quarter of the current fiscal after seeing growth in last nine months.
The jewelry sector has requested the government to reduce the import duty on the yellow metal as the demand is going down. The gold imported by the country has reduced by 16% in October 2017 in value terms and reached $2.94 billion from $3.5 billion in the same month last year.
The Gem & Jewellery Export Promotion Council (GJEPC) feels that there is a need to reduce the import tax on gold from the present 10% rate to 4%-5% to help the jewelry sector. The exports have also come down because of fall in global demand, the introduction of GST and 5% import tax by UAE. GJEPC also estimates that India’s gold imports may reach 700 tones and gold exports $43 billion in the current fiscal.
The minister of Commerce and Industry, Suresh Prabhu recently told that the center is working with inputs from gems and jewelry industry to create a package for boosting export and creating jobs in this sector. GJEPC has been asked by the ministry to create a proper business plan for promotion and growth of the sector.
India is the second largest jewelry market in the world. As there has been a decline in demand, the Indian gold is seeing a fall in imports, exports, and earnings. A report from World Gold Council (WGC) report shows that the gold demand of the country has dropped by 24% to 145.9 tonnes in the July–September 2017 from 192.8 tonnes in the same period in last year. As per WGS, the demand is low due to anti-money laundering initiatives and the imposition of GST. The fall will continue and the demand for gold in the year is estimated to be around 650-750 tonnes.
Some other analysts feel that the demand for gold will increase due to an increase in population, income levels, gold price movement, and more such factors.
GJEPC hopes the Finance Ministry will support technology up gradation and setting up of gems and jewelry parks in the country. They also hope the introduction of some rules to streamline labor in this sector.