GCC gold market to benefit as India set to hike import duty

With India set to hike customs duty on gold and other precious metals, buying gold from the GCC will be cheaper compared to Indian markets, Malabar Group, one of the world’s largest jewellery retailers, said yesterday.

“With the revised duty structure, the customer will benefit more than INR400 per gram on the Gold purchases from GCC countries. This will definitely encourage bulk buyers, especially on wedding-related purchases, to visit the GCC markets,” Abdul Salam KP, Group Executive Director, Malabar Group told The Peninsula yesterday.

India’s Union Government in its annual budget on Friday proposed to increase import duty on gold and precious metal to 12.5 per cent, a move which would make the yellow metal and jewellery expensive in the domestic market.

The union budget 2019 will definitely help in the progress of rural India however the additional import duty for gold will hurt the domestic gold and jewellery market and promote illegal gold businesses which is detrimental to the economy, Abdul Salam said.

While the new duty structure effects the Indian Jewellery Industry negatively, Jewellery business in the neighboring market will benefit out of this duty hike. Even the most popular designs and articrafts of India will be much cheaper in the  GCC states, Singapore and Malaysia.

Earlier, Abdul Salam said, these markets were depended on imports from India, whereas most of these markets have developed with manufacturing facilities. As the machineries and manpower are available from various parts of the world, Jewellery manufacturing is growing in these markets. Customers from the subcontinent, especially from India are taking advantage of this price benefit.

“Current price difference is mostly on account of 12.5 percent custom duty and 3 to 4 percent other taxes. Whereas in GCC countries, gold bullion is zero rated, and the GST charged in many countries are refunded to the tourists, thus practically no duty or tax on the purchases made by them,” he said.

The increase in import duty from 10 percent to 12.5 percent will also affect the import of jewellery from different parts of the world into India. This will affect availability of internationally designed and manufactured jewellery.

Customers will therefore find a much larger array of designs and jewellery in markets like GCC, Singapore & Malaysia. etc.

The price advantage of 10 – 12.5 percent along with the VAT refund for the tourists which will leads the NRI’s and tourists to buy gold from this part of the world.

People from subcontinent still believe gold as the ideal investment compared to other options.  As a substance with high market liquidity, it can be easily sold without having to alter the price. In addition, it is a movable asset whose value does not witness depreciation with uncertain economies. So this price advantage will be beneficial for those who buy gold as an investment, Abdul Salam said.

Shares of gems and jewellery companies fell sharply into negative terrain on the Bombay Stock Exchange after India’s Union budget proposed a hike in import duty on gold and other precious metals.

Courtesy: Peninsula Qatar