Govt proposes 12.5 pc rise in import duty on gold

The government Friday proposed to increase import duty on precious metals, including gold, silver, and platinum, a move which will make them expensive in the domestic market. Finance Minister Nirmala Sitharaman said in her Budget speech that "it is proposed to increase customs duty on gold and other precious metals from 10 percent to 12.5 percent".

The similar hike was proposed for silver (including silver plated with gold and platinum); base metal clad with silver; platinum; and waste and scrap or precious metals. Currently, these metals also attract 10 percent import duty.

Now with a hike in the duty, jewelry or other items made out of these precious metals will become expensive. The decision to raise import duty on gold came at a time when the domestic jewelry industry was demanding a cut in the same.

The commerce ministry, too, had in past recommended for reduction in the duty. The country's gold imports dipped about 3 percent in value terms to USD 32.8 billion during 2018-19. Dip in the imports expected to keep a lid on the current account deficit.

Total imports of the precious metal in 2017-18 stood at USD 33.7 billion as against USD 27.5 billion in 2016-17 and USD 31.8 billion in 2015-16. In volume terms, India imported 982 tonnes of the yellow metal in the previous financial year.

The imports in 2017-18, 2016-17 and 2015-16 were 955 tonnes, 778 tonnes, and 968 tonnes, respectively. India is one of the largest gold importers in the world, and the imports mainly take care of demand from the jewelry sector.

Gems and jewelry exports declined 5.32 percent to USD 30.96 billion in 2018-19. The country's current account deficit (CAD), the difference between outflow and inflow of foreign exchange in the current account, increased to USD 57.2 billion or 2.1 percent of the gross domestic product in 2018-19 as against 1.8 percent in the previous year.