Yellow metal strikes Make in India gold

Govt proposes to develop gold mines, assures jewellery sector to address practical issues in bringing business above board

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The central government is considering how to promote gold mining and in getting more money into research and development for gold and jewellery.

Last weekend, at a convention organised by the Bullion Federation, Arjun Ram Meghwal, minister of state for finance, said the government would look into all concerns raised by the industry and to promote the 'Make in India' programme in jewellery.

Industry representatives have been assured a look at issues such as the flow of unaccounted money into gold, high duties and other items related to export.

Sources note that in the past six months, average monthly import has come down from 70 tonnes a month to 15 tonnes for the domestic market, along with a significant rise in export of gold jewellery. This is being described as 'round tripping', of gold being purchased at a discount and re-exported with a little value addition.

The Bullion Federation has asked that before the proposed national goods and services tax (GST) is implemented, the customs duty be cut to five per cent; the minimum excise in GST would be 14 per cent. The jewellery industry is still unable to digest a 12.5 per cent duty.

The Federation, which has leading dealers and importers as members, has said its members will bill all details of gold bar numbers and the relevant refinery, to make transactions above board. There are otherwise many cases where, on a single bill, gold moves four times, and even for unaccounted gold, one bill is used. Mentioning the bar number and refinery details will remove this practice.

The Federation has also asked for allowing the export of bullion by nominated import agencies, including banks. And, to consider primary bullion as currency, while treating jewellery as goods.

The government has asked the Federation for a list of all such issues, with explanations and possible solutions, within a month.

The Gems and Jewellery Federation had a meeting with the prime minister last Saturday, in which he'd urged them to llok beyond the domestic market and to embrace innovation and technology.

For much of the past six months, gold is being quoted at a discount to the import price, much more than last year. A discount represents over-supply and dealers say unaccounted gold is coming from old stocks, along with smuggled gold. Which is also why official import have halved in the first six months of 2016.