The central government has taken a key decision to reduce the 'duty drawback' rates on exports of gold and silver jewellery and other precious metal products. The Union Finance Ministry issued a notification to this effect today. This decision is likely to have some impact on the profits of jewellery exporters.

According to the latest amendment.. The duty drawback on the export of gold jewellery has been reduced from Rs. 1,851.99 per gram to Rs. 1,794.11. This is a cut of about 3.1 percent. In the case of silver products, the reduction is even greater. The rate on the export of silver jewellery and other items has been reduced from Rs. 29,501.09 per kilogram to Rs. 26,859.02. This represents a reduction of about 9 percent.

'Duty drawback' is the process of refunding to exporters the customs and other duties paid on the raw materials used in the manufacture of exported goods. The main objective of this is to increase the competitiveness of Indian products in the international market.

However, in July this year, the government gave a boost to the jewellery export sector by drastically increasing the duty drawback rates. At that time, the refund on gold jewellery was increased from Rs. 773.17 per gram to Rs. 1,851.99 and on silver from Rs. 14,990.66 per kg to Rs. 29,501.09. 

Industry sources believe that if demand in the global market continues to be strong in the wake of the current rate cut, there may not be much impact on exports.