New Delhi: Exporters have urged the Revenue Department to increase the duty drawback rates for the gems and jewellery sector in view of the rise in customs and excise duties on precious metals announced earlier in the month.
"We have already given our presentation to the Department of Revenue. We have requested to increase the drawback rate substantially," Federation of Indian Exports Organisations (FIEO) Director General Ajay Sahai said.
Duties constitute significant portion of cost and would make the finished products costlier and uncompetitive in the world market, he said.
Currently, the exports of gems and jewellery get one percent of the cost as duty drawback. The excise duty and customs duty paid on inputs is refunded to the exporter of finished product by way of duty drawback.
Hard pressed for revenue, the government had on January 17 changed the duty structure for gold, diamond and other precious metals levying ad valorem duty on them instead of specific duty.
Under the new structure, import duty on gold has been fixed at 2 percent of the value, instead of Rs 300 per 10 gm. On silver, the new import duty will henceforth be 6 percent compared with Rs 1,500 a kg now.
Excise duty on gold has been fixed at 1.5 percent of the value against the earlier rate of Rs 200 per 10 grams. Silver will attract excise of 4 percent compared to Rs 1,000 per kg earlier.
India is the world's largest importer of gold. The metal is the third-largest import item after crude oil and capital goods. The country imported gold worth USD 45.5 billion during April-December 2011, he said.
In export category, gems and jewellery contributed almost 13 percent in India's merchandise exports of USD 245 billion in 2010-11. They are currently growing at a rate of 53.8 percent during the first three quarters of this financial year.
The change in duty structure was expected to fetch the government an additional revenue of Rs 600 crore in the two-and-half months of the current fiscal.