Golden Opportunity: Finance Minister Nirmala Sitharaman Cuts Custom Duties on Gold and Silver to 6%, Platinum Reduced to 6.5%
Finance Minister Nirmala Sitharaman unveiled a pivotal change in customs duties concerning precious metals during the Union Budget 2024 announcement. Effective immediately, the duty on gold and silver has been slashed to 6%, aimed at fostering increased domestic value addition in jewellery manufacturing.
Additionally, the finance minister also reduced the customs duty on platinum to 6.4%. These adjustments signify the government’s proactive approach to bolstering the precious metals sector, ensuring a conducive environment for growth and development in this crucial industry.
The Finance Minister’s bold move to cut customs duties on gold and silver to 6% from the previous 15%—comprising a 10% basic custom duty and a 5% Agricultural Infrastructure Development cess—is expected to have a significant impact. Analysts suggest this reduction could potentially lower domestic prices of these precious metals, thereby stimulating demand across the nation.
Hareesh V, Head of Commodities at Geojit Financial Services, emphasized the potential for this policy change to boost consumer interest in gold and silver. This adjustment reflects the government’s strategy to enhance affordability and accessibility of precious metals, aiming to bolster their market presence amidst evolving economic dynamics.
The Finance Minister’s decision to reduce the basic customs duty on gold and silver from 10% to 6% has stirred reactions across the gems and jewellery sector, a move long awaited by industry players. This adjustment, coupled with the unchanged 5% Agricultural Infrastructure Development cess (AIDC), brings the total import duty on these precious metals down from 15% to 11%. As a result, gold prices on the MCX reacted by dropping over ₹2000 to ₹70,350, and silver fell by ₹2500 to ₹86,600, reflecting the market’s pricing in of the reduced import duty gap of 4%.
Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, noted that while this development may increase demand for gold domestically, potentially bolstering global prices that hit record highs earlier this year, it could also widen India’s trade deficit and place additional pressure on the struggling rupee. The overall outlook remains cautious and uncertain, particularly with Comex gold trading below $2415, highlighting ongoing volatility in the market.
Sitharaman further announced to reduce the cost of production on steel and copper. “I propose to remove the BCD on ferro nickel and blister copper. I am also continuing with nil BCD on ferrous scrap and nickel cathode and concessional BCD of 2.5 per cent on copper scrap,” she added.
