Mumbai: Shares of jewelers tumbled after finance minister Nirmala Sitharaman in the Union Budget announced its proposal to raise import tax on gold to 12.5% from 10%.
Titan slid 3%, Tribhovandas Bhimji Zaveri 5%, PC Jeweller 4%, Thangamayil Jewellery Ltd fell 3%.
“Today’s announced import duty hike on gold from 10% to 12.5% will negatively impact India’s gold industry. It will impede efforts to make gold as an asset class particularly when gold prices are already rising globally. In addition, the grey market will thrive which will dilute efforts to reduce cash transactions,” said Somasundaram PR, Managing Director, India, World Gold Council.
Earlier, the government received representations from traders for reduction in customs duty on gold.
The country’s gold imports dipped about 3% in value terms to $32.8 billion during 2018-19, which is expected to keep a lid on the current account deficit (CAD).
“An increase in duty will be counterproductive to the objectives stated in the previous year’s budget and encapsulated in NITI Aayog’s recommendations for transforming the gold market. We believe that gold can play a positive role in the Indian economy, but to enable this; there needs to be a reduction in overall taxes, a stable policy environment and a transparent trading market,” Somasundaram further added.
At 1.50 pm, Sensex trades at 39,625.53 down 282.53 points, or 0.71%. Nifty is at 11,856.75 slipping 90 points, or 0.75%.