The government has been quick to plug the loophole in gold jewellery imports that were affecting domestic jewellery artisans. After the government imposed a 10 per cent duty on gold imports, traders circumvented this by importing jewellery from places like Thailand, Malaysia and Dubai which were cheaper as they were machine-made compared to the hand-made jewellery in India. The government saved the day for artisans by imposing a 15 per cent duty on imported jewellery. India imported jewellery worth $137.57 million between April and July and this was expected to increase in the coming festive season. Imports of gold fell to $650 million in August from $2.2 billion in July.
Whilst the government is concerned about gold imports which put heavy pressure on the country’s current account deficit, it is equally concerned about increased exports. It is, therefore, surprising that it effected a steep cut of 26-30 per cent in the duty drawback rates for engineering goods. Duty drawback is the refund of duties on imported inputs for export items and imports form about 40 per cent of the exported item. This has negated the advantages of a depreciating rupee specially at a time when engineering exports were a negative 4.19 per cent. There is no explanation for this capricious move even as the government hiked the duty drawback rates for garments to boost exports. There is a sneaking feeling that the government is swayed by the clout of various lobbies rather than the interest of the country. This needs to be looked into.