UNION BUDGET announcements: The Finance Minister in the Budget session today slashed import duties on gold and silver, sending prices tumbling. The move aims to boost demand. But broader market volatility keeps a lid on any major price surges.
Vikas Singh, MD and CEO of MMTC-PAMP, "Gold in India is more than just a precious metal. Indian consumers have an emotional connection with the yellow metal, the significance of which comes to the fore on special occasions. Given this cultural context, today’s development in the union budget of a reduction in duty on gold to 6 % is a welcome move, one which is expected to drive down the retail price of the metal and stymie the grey market. This in turn is expected to set off a virtuous cycle of increased consumption and contribute substantially to the exchequer and facilitate the growth of India as a precious metals hub.”
“We believe that this reduction of customs duty on gold to 6% is a welcome move for the jewellery industry. It will help in making gold more affordable, which will likely stimulate consumer demand and drive growth in the sector. Lower customs duties will also encourage transparency in the gold trade, and promote legitimate business practices. Additionally, this reduction can positively impact our artisans and craftsmen by increasing production volumes and providing more employment opportunities.” Says Leshna Shah, founder of Irasva Fine Jewellery.
“Overall, this policy adjustment supports the entire value chain of the jewellery industry, from suppliers to retailers, and ultimately benefits the end consumer with better value and quality." She adds.
Moreover, experts believe the impact will lower the price of gold and silver. Henceforth. Hareesh V, Head of Commodities, Geojit Financial Services, says, "Customs duty on gold and silver has been reduced to 6% which may lead to a decline in domestic prices and perhaps lift demand. The existing duty on gold and silver is 15% which comprises 10% of basic customs duty and 5% as Agricultural Infrastructure Development cess."
Gold prices on the MCX hovered at Rs 72,838 per 10 grams on Tuesday, hitting an intraday low of Rs 68,500. In the international market, prices maintained a similar trend, hovering around $2415 per ounce. This indicates a certain level of stability in the gold market. In the silver market, the price on the MCX hovered at Rs 88,995 per kg and hit an intraday low of Rs 84,275.
Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said, "In the Budget, it was announced that Basic Custom Duty and AIDC on gold have been reduced, bringing the total from 15% to 6%. As a result, the price of gold reacted lower in MCX by more than Rs 4000 to Rs 68,900. The broad view remains volatile and weak as Comex gold stays below $2415. The interest rate cut in the US will be keenly anticipated, now that Indian gold has become discounted, presenting a more favourable long-term buying opportunity for gold in Indian markets. Price range for Gold shifts to 67500-69500 range."