The Government of India’s (GOI) proposal to hike GST on gold jewellery to 5 per cent from 3 per cent is set to derail the industry, according to India’s industry members.
The Gem & Jewellery industry is currently returning to its former status after being disrupted by Covid-induced lockdowns, retailers shutting down and mandatory hallmarking.
India’s jewellery demand in the September quarter was up 58 per cent to 96 tonnes buoyed by lower prices and pent-up purchases, as per the World Gold Council data.
Jewellers were well prepared for a sudden spike in demand as gold imports in the last three quarters of this year was much higher at 691 tonnes compared to the demand of 360 tonnes recorded in the same period last year.
The proposed move to hike the GST rate, if implemented, will make gold more expensive. Also, the move will definitely encourage unorganised gold trade and impact organised retailers who follow government norms to the core, according to most jewellers.
Jewellers fear the move will encourage black marketing and smuggling of the yellow metal.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished
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