A reduction in duties on gold and silver from 15% to 6% (from a minimum of 20%), and on platinum and palladium from 15.4% to 6.4%, has been announced. The customs reform was announced as part of the new Delhi government budget for 2024-25.
Its main objective is to support the country’s jewellery industry by increasing the added value of products and improving the competitiveness of exports. Industry representatives said that the reduction in duties will also lead to a reduction in the smuggling of gold bars.
India is the second-largest gold importer in the world after China (747 tonnes in 2023), but domestic production is almost 50 times less – at 15 tonnes. The reduction in duties is expected to spur domestic demand for physical gold and jewellery in India, which has weakened due to a record rise in metal prices worldwide. Experts do not rule out a drop in prices in the local market by 8-9%.
The Indian government also reduced or exempted 25 “critical minerals,” including battery minerals and metals such as graphite, cobalt, copper, molybdenum and lithium, citing their importance to strategic sectors such as energy, defense and microelectronics. The decisions were taken as part of the government’s new “mission” to strengthen the supply chain. The Finance Minister estimates that it will give a major boost to domestic refining and beneficiation capacity, making these materials easier to access in key sectors. The Finance Ministry has promised a comprehensive review of all duty rates within the next six months.