The investors and traders in the gold industry hold high expectations in terms of budget 2020. There have been several proposals brought forth by the All India Gem and Jewellery Domestic Council (GJC) to seek remedial measures and solutions to improve the gold industry in India. India which is one of the highest consumers of gold in the world and demand for gold is always high. Since, the import duties on gold were increased, the year 2019 for the gold market experienced situations of low demand and the gold market has also observed increasing illegal activities moving towards the New Year. This is the reason why the Gem & Jewellery Domestic Council seeks a reduction in the import duties on the gold jewellery in the government budget 2020-21. The gold custom duty rates are expected to be reduced in the parliament budget to revive handcrafted, labor-intensive businesses, both small and large sizes.
According to reports, the high import duties on gold ornaments in India increased the risk of smuggling which affected the social and economic status of the country. The alarming proportions and rise of unorganized channels to procure gold brought the gold market to a vulnerable position. The budget is supposed to help create a solution that resolves the problems faced by the industry so as to restore the market back to its functional state. The year 2020 will be a turning point for the gold market as several policies are to be declared that would help boost consumer demand and regain consumer trust in acquiring pure quality gold.
The budget 2020 will be extended to grant benefits in terms of the reduced Income tax rate. This will be an advantage to create opportunities for partnerships or proprietorship firms as a majority of the Gem & Jewellery Industry are either one of those types of firms. In respect to those involved in the trading of gold are anxiously waiting for positive and immediate reliefs that will boost the jewellery sector which witnesses a slow growth due to the high customs duty in the previous budget. The budget 2020 has also been proposed to include the hallmarking policy which would require every gold ornament sold in the market to be hallmarked and approved under the supervision of the Bureau of Indian Standards (BIS).
The initiation date has been finalized to begin from the 15th of January of this year. Gold traders and retailers have been given time to exhaust all their non-hallmarked gold jewellery before the policy becomes official. This will protect consumer’s rights and most especially protect the rural consumers of gold who consist of half the consumption rates of gold in India. Rural consumers are the least informed consumers of gold in India and the hallmarking policy will benefit them in positive ways.
The rise of organized sectors in the gold industry will support the demand for gold henceforth as the consumers today are more digitally inclined and also are knowledgeable. The hallmarking policy will encourage the increase of these sectors. Also, the gold monetization scheme that will be coming into effect to convert idle household gold into assets for its owners will be a big breakthrough for the industry. Gold would be able to be deposits physical gold, coins or jewellery in a gold savings account and get returns on investments just like a fixed deposit. This would lead to people gaining more interest in investing more in gold and it will also improve demand as well for the safe-haven asset. The implementation and success of this scheme are expected to make an impact from 2020. The gold market is expected to grow and gain positive momentum with all the policies, schemes and remedial measures in-store to create a strong impact and transform the industry to a great extent.