Hike in duty drawback on gold, silver to boost exports
The government decision to increase the drawback rate on select gold and silver article will help moderate the impact of the proposed US tariff and sliding global demand for jewellery.
The Customs has notified that gold jewellery drawback rate has been increased to ₹405.40 per gram from ₹335.50 of net gold content. For silver jewellery and related articles the rate has gone up to ₹4950.03 per kilogram from ₹4468.10 of net silver content.
A drawback is a refund of domestic duties and taxes especially on an imported product subsequently exported or used to produce a product for export.
The move to increase drawback rates will enable exporters to get some relief in terms of input costs, especially when gold prices are hitting a new high.
Though the US government has paused the 27 per cent reciprocal duty on gem and jewellery imported from India for 90 days, the uncertainty still continues over the bilateral trade agreement between India and the US amid weak demand.
The US had imposed 32-34 per cent duty on gold and platinum jewellery, while silver jewellery was taxed as high as 40.5 per cent. Other items such as lab-grown diamonds and imitation jewellery levy was hiked up to 38 per cent.
Colin Shah, MD, Kama Jewelry said the government’s move to increase the duty drawback rates for gold is a step in the right direction for the jewellery export sector and will ensure price competitiveness of India in overseas markets besides improving liquidity.
“We are hopeful that this step will boost export momentum, particularly in important markets like the UAE and the US, where demand for lightweight gold jewellery remains strong,” he said.
In FY26, the industry expects gold jewellery exports to increase 12 per cent supported by steady global demand, empowering Indian exporters to maintain their edge among their competitors, he added.
In FY’25, gold jewellery exports were down at $11.21 billion against $11.23 billion logged in the same period last year, according to the Gem and Jewellery Export Promotion Council of India data. Despite the gold prices increasing sharply, the volume was down due to geopolitical tension and tariff war across the globe.
Overall, gem and jewellery exports were down 12 per cent in FY25 at $28.50 billion against $32.28 billion in FY24.
Gold prices have surged 24 per cent to $3,230 an ounce so far this year. The Indian domestic spot gold prices have mirrored this trend, rising 23 per cent y-t-d to ₹93,217 per 10 gram.
Source: https://www.thehindubusinessline.com