The increase in customs duty on diamonds, precious stones and jewellery will give a boost to domestic manufacturing and promote ‘Make in India’
Finance Minister Arun Jaitley said that the government would formulate a comprehensive Gold Policy to develop the precious metal as an asset class.
Gold Monetisation Scheme would also be revamped to enable people to open a hassle-free Gold Deposit Account.
“The government’s announcement that it will formulate a comprehensive gold policy to establish gold as an asset class is ground-breaking. The establishment of regulated gold exchanges is exceptionally positive towards making gold a mainstream national value-added asset. A stable policy environment and a fair and effective trading market will bring the much-needed transparency and stability,” said Somasundaram PR, Managing Director, India, World Gold Council Jewellers also favoured the increase in custom duty in diamonds, precious stones and jewellery.
The increase in customs duty on diamonds, precious stones and jewellery will give a boost to domestic manufacturing and promote ‘Make in India’. It's a robust long-term thinking budget which will drive consumption growth in India with the rural economy getting a fillip and salaried individuals also getting some relief with the re-introduction of standard deduction thus translating into more disposable income in the hands of Indians," said Suvankar Sen, Executive Director, Senco Gold & Diamonds
The steps taken for the benefit of agriculture and infrastructure development also seemed to make the jewellers happy.
"I expect an indirect impact on gold trade mainly coming from the government’s steps to improve farm income and higher infrastructure spending. This will indirectly help gold trade as it will enhance farm revenues, job creation and hence more disposable income in the hands of rural population. This will indirectly benefit gold trade since rural India always shows its inclination to invest in gold jewellery than in other asset classes," said Boby Chemmanur, chairman and managing director, Chemmanur International Jewellers Group.
Talking about other impacts of the Budget in the sector Chemmanur said,"No adjustment in respect of transactions in immovable property where Circle Rate value does not exceed 5 percent of consideration will help move some amount of money from the real estate sector to gold. Add to this the Long Term Capital Gains Tax on income exceeding Rs 1 lakh at the rate of 10 percent, without allowing any indexation benefit may shift sizable amount of money from the already pricey stocks to gold, as gold has been treated as a safe haven at all time.""Further, the proposal to introduce tax on distributed income by equity-oriented mutual funds at the rate of 10 percent also auger well for gold. Finally, a higher economic growth pegged at 7% to 7.5% in the near term and above 8% in the medium term will make the Indian economy the best performing economies in the world. This will translate into higher disposable income, a part of which may be used to invest in gold. To sum up, I see gold trade benefiting more from a derived demand from higher economic growth, which may be albeit delayed," Chemmanur added.
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