India Hikes Gold Tariff from 6% to 15%

 

India has more than doubled tariffs on gold and silver – up from 6% to 15% – in a move aimed at easing pressure on its foreign exchange reserves.

The increase took effect on 13 May, just three days after Prime Minister Narendra Modi called on people to stop buying gold for a year, as part of a broader austerity program.

The Gem & Jewellery Export Promotion Council (GJEPC) warned that increased tariffs would result in higher prices rather than lower imports.

Jewellery retailers believe limiting the volumes imported, rather than raising duties, would be more effective.

Stocks in Kalyan Jewellers and Thangamayil Jewellery fell by around 6% on the day in response to the news.

“As expected, the government has raised duties to curb the current account deficit. However, this could affect demand, as gold and silver prices were already elevated,” said Surendra Mehta, national secretary of the India Bullion and Jewellers Association.

India is the world’s second biggest gold buyer after China. The new 15% tariff on gold and silver imports comprises a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC).

Source: DCLA

Trump Imposes 25% Tariff, Plus “Penalty” on India Exports

India’s diamond industry today (30 July) had its worst fears confirmed as the US announced all imports would be subject to 25 per cent tariffs, effective as of Friday (1 August).

In addition it will face an unspecified extra penalty for buying military equipment, oil and other goods from Russia.

Lingering hopes of a last-minute deal to avoid the additional tariffs were crushed when President Donald Trump singled out India, the world’s biggest diamond manufacturer, for special mention on his Truth Social platform.

“While India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country,” he wrote.

Kirit Bhansali, chairman of the India’s Gem and Jewelry Export Promotion Council (GJEPC) reacted to the news saying: “This is a deeply concerning development. The Indian gem and jewellery sector, in particular, stands to be severely impacted.

“The United States is our single largest market, accounting for over $10 billion in exports – nearly 30% of our industry’s total global trade.

“A blanket tariff of this magnitude will place immense pressure on every part of the value chain.”

Colin Shah, managing director of diamond jewelry manufacturer Kama Jewelry, reacted to today’s news, said: “With the US being one of the key export destinations, this will severely impact the sectors like gems and jewellery that are heavily dependent on exports.

“Going ahead, we expect trade activities to remain muted with U.S. However, we also need to wait and watch how the situation unfolds.”

Less than two weeks ago, Trump said the US and India were “very close” to reaching an interim agreement, but those talks stalled, primarily over agricultural and dairy goods.

And only days ago US Trade Representative Jamieson Greer told reporters: “We continue to speak with our Indian counterparts. We’ve always had very constructive discussions with them.”

Source: DCLA