By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all

Jewellers, Jewellery Associations, Bullion Traders, Bullion Refiners, etc, and most of the Bullion market participants have a lot of expectations from the Budget every year for the development of the Bullion Industry. Here is the explanation of the top five expectations from this budget:

	Budget Expectation	Current Scenario	Reasoning for change required
1)	Reduction in Import Duty on Gold from 15% to 10%	Import of Gold attracts 15% import duty including 5% AIDC. Adding 3% GST to it makes gold 18% dearer than other countries, which is too high. High import duty also increases the premium on gold prices in India, making it uncompetitive with international prices.	Import Duty on Gold was raised to such a high level a few years back when CAD was too high.  If you look at the current account deficit now, it is far better than what it was earlier. So that means the government has excess foreign reserves, and this would be the right time to cut the import duty on gold.
2)	Silver import duty (which is currently 8%), is to be raised to be on par with Gold (which is currently 14%), under the CEPA agreement.	There is a disparity between the import tariff of 8% under the CEPA agreement for silver and the 15% duty imposed on imports from other nations. India permits unlimited imports of silver with a 7% customs tax concession under the CEPA, however, only 1% of imports of gold totalling 160 metric tons are eligible for such concessions.	Taking advantage of this difference, multifield silver imports from the UAE rose from a pitiful $29.2 million in 2022–2023 to $1.74 billion in 2023–2024.
3)	Stopping Import Duty benefits from LDC and FTA countries as it distorts the bullion market.	Several commodities are imported under the DFTP (duty-free tariff preference) arrangement from LDCs. Some refineries in India have been importing unrefined gold (gold dore) from LDCs without any import duty. The gold is imported through bilateral trade agreements between India and some of the poorest nations, such as Tanzania and Guinea. Normally, gold dore attracts a customs charge of 14.35%, but the customs authorities are allowing it to be imported duty-free.	It distorts a level playing field since not all refiners benefit from duty-free imports. The unlawful imports harm the domestic market. At reduced tariffs, 300-500 kg of gold are imported every day.
4)	Unification of the Bullion market under a single regulator	The bullion market is regulated by SEBI, RBI, DGFT, Ministry of Finance, Ministry of Commerce, etc., currently and regulatory framework/ announcements impact the market.	A uniform regulatory framework has the potential to simplify supervision while increasing market efficiency and transparency.
5)	Interest income on Sovereign Gold Bonds to be made tax-free	Sovereign Gold Bonds are becoming increasingly popular in India. Sovereign Gold Bonds’ interest is taxed if redeemed within eight years, according to regulations. SGBs are taxed like income from other sources, whereas bonds are not subject to TDS.	SGB started in 2015 and Indians have shown great interest as can be seen in its outstanding units subscribed, which is almost 147 tonnes to date. If the government wants to promote digital investments in gold, rather than physical buying, then this action will be helpful.

 

 

 

 

 

Other expectations from the budget are the establishment of GST-bonded warehouses, mandatory hallmarking across India for all jewellers, permitting EMI on jewellery purchases and allowing lending and borrowing through commodity exchanges. With IIBX at GIFT City developing as a gateway for importing bullion, jewellers expect a Special Benefit of 0.5% should be given for importing gold through IIBX. Also, all imports and exports should be allowed through IIBX, which will enhance the gold market and contribute to economic growth.

 

 

Disclaimer: This report contains the opinion of the author, which is not to be construed as investment advice. The author, Directors, and other employees of Augmont Enterprise Private Ltd. and its affiliates cannot be held responsible for the accuracy of the information presented herein or for the results of the positions taken based on the opinions expressed above. The above-mentioned opinions are based on information, which is believed to be accurate, and no assurance can be given for the accuracy of the information. The author, directors other employees and any affiliates of Augmont Enterprise Private Ltd cannot be held responsible for any losses in trading. In no event should the content of this research report be construed as an express or implied promise, guarantee or implication by or from Augmont Enterprise Private Ltd. that the reader or client will profit or the losses can or will be limited in any manner whatsoever. Past results are no indications of future performance. Information provided in this report is intended solely for informative purposes and is obtained from sources believed to be reliable. The information contained in this report is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. We do not offer any sort of portfolio advisory, portfolio management or investment advisory services. The reports are only for information purposes and are not to be construed as investment advice