By RAJESH ROY And BIMAN MUKHERJI :WSJ:April 2, 2012, 5:21 a.m. ET
NEW DELHI -- India has allowed jewelry and watch maker Titan Industries to directly import gold, and plans to extend it to other private companies too, eliminating the need to rout imports through banks or designated state-run agencies.
The move comes on the heels of a nationwide shutdown by retailers to protest against tax hikes in the federal budget last month.
"We have agreed in principle to allow Titan to import gold on its own. The company will need to get a license from us as gold is a restricted commodity," Anup K. Pujari, director-general of foreign trade, said.
While direct imports will enable Titan avoid nominal charges to bankers or state-run agencies, the removal of procedural hassles would be the main benefit.
The government will also consider allowing other private companies to import gold directly, Mr. Pujari said. The central bank has already given its approval, he added.
But retailers said the measure isn't of much help and continue to seek a rollback of the tax hike. "It only saves some nominal charges," Rakesh Saraf, a spokesman for protesting retailers said. Retailers and traders staged a mass protest in New Delhi Monday, he added.
On March 16, the government proposed to double the import tax on gold to 4% and impose excise tax on most gold jewelry.
The changes are aimed at increasing state revenue, discouraging purchases--the precious metal is India's second-largest import item by value after crude oil--and keeping a lid on the country's current-account deficit.
Last week, Finance Minister Pranab Mukherjee ruled out a rollback of the import tax, but said he may consider tweaking the excise tax on unbranded jewelry.
"We have not heard anything on the excise tax since then. We plan to meet all Parliamentarians on the issue," Mr. Saraf said.
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