The World Gold Council has described the decision to increase import duty on gold from 10% to 12.5% announced as part of Budget 2019 presented in Parliament today by Hon’ble Minister of Finance Smt Nirmala Sitharaman, as “counterproductive to the objectives stated in the previous year’s budget and encapsulated in NITI Aayog’s recommendations for transforming the gold market”.

Expressing fears that the “grey market will thrive which will dilute efforts to reduce cash transactions”, Somasundaram PR, Managing Director, India, World Gold Council, instead called for “a reduction in overall taxes, a stable policy environment and a transparent trading market”, stating that these will enable gold to “play a positive role in the Indian economy”.

The statement in full:

Somasundaram PR, Managing Director, India, World Gold Council –

 “Import duty hike on gold from 10% to 12.5% will negatively impact India’s gold industry. This will impede efforts to make gold as an asset class particularly when gold prices are already rising globally. In addition, the grey market will thrive which will dilute efforts to reduce cash transactions.

Millions of Indians invest in gold as part of their household savings, not simply as discretionary spending for consumption. People buy gold as a long-term investment to protect their wealth and gold also has huge significance socially, emotionally and economically in India.

An increase in duty will be counterproductive to the objectives stated in the previous year’s budget and encapsulated in NITI Aayog’s recommendations for transforming the gold market. We believe that gold can play a positive role in the Indian economy, but to enable this; there needs to be a reduction in overall taxes, a stable policy environment and a transparent trading market.”