Import duty on gold hiked to 8%, jewellery stocks in focus

Despite the duty hike, gold imports reached at a staggering USD 15 billion in the last two months. On Monday, Finance Minister P Chidambaram echoed his concerns after gold imports touched 162 tonnes in May . Shares of jewellery companies were mostly higher after the government Wednesday hiked import duty on gold from 6 percent to 8 percent.

Shares of Shree Ganesh Jewellery House ,  Gitanjali Gems and PC Jeweller were key gainers, up 0.5-4 percent. Tara Jewels was top loser in this space, down 6 percent. Companies say this move will not impact their revenues much. Abhishek Gupta, President of leading gems and jewellery company Gitanjali Gems said that only 10 percent of industry participants buy gold on consignment basis, while the rest purchased it on supplier's credit. Earlier in January this year, the government hiked duty from 4 percent to 6 percent to discourage imports of gold in India, world’s largest buyer of yellow metal.

Despite the duty hike, gold imports reached at a staggering USD 15 billion in the last two months. On Monday, Finance Minister P Chidambaram echoed his concerns after gold imports touched 162 tonnes in May. "More steps will have to be taken to reduce gold imports. Export import policy on gold will have to be reviewed. May consider banninggold coin sale by banks," he added. Reserve Bank of India and the government are working in tandem to discourage gold imports. In last 2 years, import duty has been hiked from 2 percent to 8 percent. High import has led to widening current account deficit that has been a major concern for the government.

Source : .Money Control