What Is Duty Drawback Rate And How They Impact Gold And Silver Jewellery Exports? Explained

Duty Drawback Rate: Ajay Sahai, Director General of the Federation of Indian Export Organisations, said the reduction in drawback rates was a direct result of the duty cuts in the recent Union Budget

Duty Drawback Rate: The scheme's adjustments come on the heels of the Union Budget 2024, which saw import duties on gold and silver reduced from 15 per cent to 6 per cent.

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Duty Drawback Rate: The central government has sharply reduced drawback rate on gold and silver jewellery exports. This decision comes in response to recent import duty cuts on these precious metals, as announced in the Union Budget 2024. According to a notification from the Department of Revenue, the drawback rate for gold jewellery has been slashed from Rs 704.1 per gram to Rs 335.5 per gram. Similarly, the rate for silver jewellery and silver articles has been lowered to Rs 4,468 per kilogram of net silver content.

The duty drawback scheme aims to refund the import duties and internal taxes paid on goods used in the manufacture of export products. The scheme's adjustments come on the heels of the Union Budget 2024, which saw import duties on gold and silver reduced from 15 per cent to 6 per cent. The government also lowered the customs duty on platinum to 6.4 per cent.

What is Duty Drawback Rates?

The duty drawback rate refers to the percentage or amount of customs duties, taxes, and fees that a company can reclaim from the government after exporting goods that were previously imported. This typically applies when imported goods are used in manufacturing or are later re-exported without being consumed domestically.

How It Can Impact?

For example, if a company imports raw materials to produce a product and then exports that finished product, the duty paid on the imported materials can be refunded at a specific duty drawback rate. The rate is set by customs authorities and can vary by country and type of product.

Ajay Sahai, Director General of the Federation of Indian Export Organisations, explained that the reduction in drawback rates was a direct result of the duty cuts in the recent Union Budget. "The duty drawback on gold and silver jewellery was reduced as the duty on these metals was lowered in the Budget," Sahai said.

For exporters, the duty drawback rate determines the percentage or amount of customs duties and taxes that can be reclaimed from the government after exporting goods made from imported materials. The recent changes are expected to impact the gems and jewellery sector, which has already witnessed a 7.45 per cent decline in exports to $9.1 billion during the April-July period of the current fiscal year.

Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2024 on July 23, highlighted the government's intent to enhance domestic value addition in gold and precious metal jewellery by reducing customs duties. This policy shift is expected to boost the competitiveness of Indian jewellers in the global market.