The maiden Budget presented by the newly elected government in India disappointed the gold industry in the country. Contrary to expectations by the industry participants, the Indian Finance Minister decided to keep the import duty on gold at 10{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}. There were widespread hopes that the gold…
The maiden Budget presented by the newly elected government in India disappointed the gold industry in the country. Contrary to expectations by the industry participants, the Indian Finance Minister decided to keep the import duty on gold at 10{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}. There were widespread hopes that the gold import duty will be reduced by 2{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}-4{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} during the Budget.
However, the government is willing to revise the policy once the country’s fiscal situation becomes more comfortable. He further stated that the government has carefully monitored the fiscal and current account deficit (CAD) situation. He added that there is no room for any duty cut at the moment.
The previous government had raised the gold import duty from 2{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} to 10{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} in order to check the rising CAD. In addition, the Reserve Bank of India (RBI) had introduced various norms on gold imports. Consequently, the gold imports by the country had dropped significantly. According to most recent monthly import statistics, gold imports plunged by 72{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} during May. The CAD too dropped from 4.7{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} of GDP in 2012-13 to 1.7{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} of GDP in 2013-14.
The government decision to leave the gold import duty unchanged surprised the entire gold industry in the country. Several associations while expressing dissatisfaction warned that gold smuggling would continue to remain rampant in the country.
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