Industry experts say the move could boost retail demand of gold and help curtail smuggling.
New Delhi:
Finance Minister Nirmala Sitharaman announced a significant reduction in import duties on gold to 6% from the previous rate of 15%, which will likely be welcomed by those interested in purchasing the precious metal. Additionally, the customs duty on silver has also been cut.
The reduction in duties applies to coins of precious metals, gold/silver findings, as well as gold and silver bars. The duty for these items was brought down to 6% from 15%. Similarly, for gold and silver dore, the duty decreased to 5.35% from 14.35%.
This move is expected to not only boost retail demand for gold but also help in curbing illegal smuggling activities related to the precious metal.
“To enhance domestic value addition in gold and precious metal jewellery in the country, I propose to reduce customs duties on gold and silver to 6% and that on platinum to 6.4%,” stated Ms. Sitharaman during her presentation of the seventh Union Budget.
The increase in demand for gold from India could have a ripple effect on global prices, especially considering that they have hit record highs this year. However, this may also widen India’s trade deficit and put pressure on the rupee, which has been weakening.
Exemption for Critical Minerals and Solar Stocks
In addition to the changes in import duties for gold and silver, the Finance Minister also announced an import duty exemption for 25 critical minerals, including lithium. This exemption comes as India looks to secure supplies of lithium, a crucial raw material used in the production of electric vehicle batteries.
Following this announcement, solar stocks saw a notable increase of over 11% around noon. This surge was a result of Ms. Sitharaman’s update on the ‘PM Surya Ghar Muft Bijli Yojana,’ under which a significant number of people have registered.
The ‘PM Surya Ghar Muft Bijli Yojana,’ which was introduced earlier this year, aims to install rooftop solar plants to provide free electricity to 1 crore households, up to 300 units per month.
The scheme has garnered substantial interest, with over 1.28 crore registrations and 14 lakh applications. The Finance Minister expressed intentions to further promote this initiative to encourage more households to embrace solar energy.
Overall, the announcements made in the Union Budget 2024 indicate a strategic focus on promoting sustainable practices and enhancing the domestic market for precious metals and renewable energy sources.
