New Delhi, Read. Businessmen exporting gold and silver jewelery may get a shock from a decision of the Central Government. The government has reduced the duty drawback rates on export of jewelery and other products made of precious metals.
According to the notification issued by the Finance Ministry, the refund on gold jewelery has been reduced by about 3.1 percent and the refund on silver jewelery and other products has been reduced by about 9 percent. Due to this, Indian jewelery exporters will get less refund than before and the profitability of their business may be affected.
How much refund will be given on gold jewelery now?
After the new amendment of the government, the duty drawback rate on export of gold jewelery has been reduced from Rs 1,851.99 per gram to Rs 1,794.11 per gram. That means exporters will now get Rs 57.88 less refund per gram. This cut may impact those companies which export gold jewelery abroad on a large scale. The difference between their costs and profits may be affected due to reduced refunds.
Reduction of about 9 percent on silver products
The government has also reduced the refund rate on export of silver jewelery and other products. While earlier exporters used to get duty drawback at the rate of Rs 29,501.09 per kg, now it has come down to Rs 26,859.02 per kg. In this way, there has been a reduction of Rs 2,642.07 in refund per kilogram. This reduction in refund on silver products may affect the financial calculations of exporters. This is especially likely to affect companies that export large quantities of silver jewelery and other precious metal products.
Duty drawback rates were increased in July
It is noteworthy that in July this year, the government had increased the duty drawback rates significantly to provide relief to the jewelery export industry. At that time, in view of the rising costs and uncertainties of the global market, the refund rate on gold jewelery was increased from Rs 773.17 per gram to Rs 1,851.99 per gram. Similarly, duty drawback on silver products was increased from Rs 14,990.66 per kg to Rs 29,501.09 per kg. At that time this step was considered important towards increasing the competitiveness of Indian exporters. Now the relief provided to exporters will be reduced due to further reduction in rates.
What is duty drawback and how do exporters get the benefit?
Duty drawback is a provision under which eligible exporters get a refund of eligible customs duty or other prescribed duties paid on raw materials and other inputs used in the products they export. Its objective is to reduce the cost of domestic products and keep them competitive in the international market. Due to reduction in rates, exporters will get less refund than before. This may impact their cost structure, business margins and ability to compete in the international market.
What will be the impact on jewelery business?
The reduction in duty drawback may impact jewelery exporters, companies involved in bullion business and businessmen sending gold and silver products abroad. However, the actual impact will depend on global demand, raw material prices, production costs and exporters' trading margins.
If demand in the international market remains strong, the impact on exports may be limited. Conversely, lower refunds may increase challenges for exporters in case demand weakens or costs rise. In such a situation, the impact of this decision of the government is being considered important for the Indian jewelery export business in the coming times.
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