By Pratap John/Chief Business Reporter
Non-resident Indians (NRIs) will benefit from a recent Indian proposal to raise the duty-free limit for jewellery, which remained unchanged since 1991 though gold prices have increased manifold during the period.
In his budget speech for the fiscal 2013-14, Indian finance minister P Chidambaram said the government proposed to raise the duty-free limit for jewellery to Rs50,000 for men and Rs100,000 for women.
However, only those who have lived abroad for one year minimum or those are shifting their residence to India would become eligible for this.
Hitherto, the duty-free allowance for gold including finished jewellery was Rs10,000 for men and Rs20,000 for women. This limit was fixed in 1991 when the prices of gold were much lower than what are now.
Many NRIs vehemently opposed an earlier Indian government proposal to hike duty import of gold as a means to curb high yellow metal imports.
Recent reports from New Delhi indicated the Indian government was considering further curbs on gold imports to contain the country’s ballooning current account deficit, which stood at $38.7bn or 4.6% of GDP in the first half of the current fiscal year.
This has mainly been attributed to wider trade deficit, resulting from high import bill of oil and gold.
In this context, the budget proposal to enhance the duty-free limit five-fold will come as a relief to many Indians, who buy finished jewellery for personal use and also as an investment to hedge inflation.
A J Joju, regional manager (Qatar) of Joyalukkas Jewellery, said the budget proposal if adopted by India’s parliament would help many NRIs who regularly invested in gold.
“The earlier duty-free limit was too low and insignificant. At best, a male could take 3gm and female 6gm using the earlier duty-free limit. In 1998, the gold price touched a low of QR28 per gramme, whereas it is priced QR178 for 22-carat and QR191 for 24-carat
currently,” Joju points out.
“Gold still maintains a safe haven status and has greater relevance at a time of global economic turmoil. There has been a growing demand for gold bars - from 1gm to 116gm, with the bullion remaining a ‘safe haven’ for many discerning investors,” Joju said.
The Indian decision to enhance the duty-free limit for jewellery may also end complaints to a large extent of harassment by customs officials at various ports of entry across the country.
Although there is no sharp difference in gold prices between markets, the Gulf region is still considered a preferred shopping place for the yellow metal because of “guaranteed quality”.