India’s duty hike to boost gold sales in GCC, Singapore, Malaysia: expert
The Gold and jewellery markets in the GCC, Singapore, Malaysia, Sri Lanka, etc are expecting a surge in the coming days, thanks to India’s decision to hike import duty on gold and other precious metals, said a top industry expert. According to Shamlal Ahamed, Managing Director – International Operations, Malabar Gold & Diamonds: “The price advantage of 10-12.5 per cent along with VAT refunds for tourists will lead to GCC, Singapore, Malaysia, Sri Lanka, etc benefiting from jewellery tourism.”
In budget 2019-20, the Indian government proposed to raise the import duty on gold and other precious metals from 10 per cent at present to 12.5pc. “The union budget of 2019 will 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 are detrimental to the economy,” Shamlal Ahamed warned.
GCC gold market to grow
The Government of India’s move will positively impact business in the neighbouring markets, while it will “affect the Indian Jewellery Industry negatively,” pointed out Abdul Salam KP, Group Executive Director, Malabar Group. He highlighted that even the most popular designs and articrafts of India will be much cheaper in the UAE, other GCC states, Singapore and Malaysia.
“Earlier these markets were depended on imports from India, whereas most of these markets have developed with manufacturing facilities. As the machinery and manpower are available from various parts of the world, Jewellery manufacturing is growing in these markets,” he added.
It is widely expected that the customers from the subcontinent, especially from India, will take advantage of the price benefit brought forth by the import duty increase.
Advantage bulk buyers
The benefit of Rs 400 per gram on Gold purchases from the GCC countries would encourage bulk buyers “especially on wedding-related purchases,” said Abdul Salam. “If a family of four visits Dubai or any of these markets and bring back ornaments on a reasonable allowed quantity, they can cover their trip cost easily. They have the additional benefit of much wider choice from international designs of Jewellery,” Abdul Salam added.
Explaining further, he said that the current price difference is mostly on account of 12.5pc custom duty and 3pc to 4pc 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.”
To hurt market
The Group Executive Director, Malabar Group, however, warned that the import duty increase will hurt the import of jewellery from different parts of the world into India. “This will affect the 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.” He said the price advantage of 10 – 12.5pc along with the VAT refund for the tourists “will lead NRIs and tourists to buy gold from this part of the world”.