Sonia Gandhi seeks gold import duty cut, jewellery stocks soar

Photo: Ramani's Blog

[Editor: India's Finance Minister, P Chidambaram's draconian policy of cutting Fiscal Deficit, would have long standing side effects, both in terms of vote bank and the economy. This kind of rules which his Finance Ministry has applied to many sectors, especially, in the Gems & Jeweler space, is generally seen in a dictatorships and it is unfortunate that our friends from this fraternity are made the butt of the vicious attack; though our Commerce Minister is much more considerate. This is the same P Chidambaram who doled out around Rs.60, 000 Crores in the name of "FARM LOAN WAIVER" and created a big hole in our economy. And  now he is making the Jewelers pay for his past Sins---what a ridiculous act!! George Bernard Shaw commented: “Politics is the last resort of scoundrels.” If immediately some relief is not given to the Gems and Jewelry sector, then the UPA should be ready to face the MUSIC, because Lok Sabha elections are only few months away]

23 Jan, 2014: Congress president Sonia Gandhi has written to the commerce ministry seeking a cut in the import duty on gold, reports ET Now, citing government sources. 

Ms Gandhi is said to have pushed for the relaxation of 80:20 scheme on the import of the yellow metal. 

This comes after three import duty hikes seen in the year gone by. 

Jewellery stocks perked up in the late trade, perhaps due to this piece of news as the surge in these counters was seen in late trading. 

Titan Company Limited closed the day up 3.78%, at Rs 225.05. 

Gitanjali Gems surged 6.16% to Rs 71.55. 

Tribhovandas Bhimji Zaveri jewellers closed at Rs 139.50, up 6.86%. 

PC Jeweller gained 4.48% to close the day at Rs 80.50. 

Reacting to the news, brokerage Sharekhan says, "if the same comes through it would be positive for jewellery retailers like Titan, TBZ, etc." 

"Also, since the decline in gold imports - supported by import curbs - has been instrumental in reducing current account gap, the relaxation in import duty may happen in a phased manner," it adds. 

Gold imports fell to 19.3 tonne in November from a high of 162 tonne in May in the wake of a series of curbs by both the government and the RBI. 

These included raising Customs duty on standard gold to 10 per cent from 2 per cent to restrict imports that bloated the current accountdeficit to an all-time high of 4.8 per cent of gross domestic product, or $88 billion in 2012-13. 

Besides, the RBI had in July introduced an 80:20 scheme - 20 per cent of the bullion imported had to be exported back. Imports were also not allowed if importers were unable to meet the 20 per cent norm. The government also banned trading of gold in special economic zones. 

The measures had the desired impact of slowing down gold and silver imports to $25.5 billion in the first eight months of the fiscal, from $33.5 billion in the year earlier. As per the RBI, the CAD is likely to be in the range of $56 billion against the lifetime high of $88.2 billion in the previous year. 

It may be noted that India used to be the world's biggest buyer of the bullion until the government introduced the curbs in order to contain a record current account deficit. 

Courtesy: The Economic Times