The reduction of India’s trade deficit has given the country room to consider lowering the 10 percent import duty on gold, according to Ministry of Commerce & Industry Joint Secretary Manoj Dwivedi, reports Reuters.
India had raised the import duty on gold to 10 percent in August 2013 as a measure to narrow what was then a yawning current account deficit. However, the country’s trade deficit in June this year almost halved from a month earlier to $12.96 billion.
Dwivedi was quoted as saying that the Commerce Ministry considers a 2 percent import duty to be the ideal rate. He said that with the improvement in the trade deficit, a reduction in import duty might be considered by the Finance Ministry for the next national budget. The Finance Ministry declined comment.
While India’s annual gold import is pegged in the region of800 tonnes, the World Gold Council has said that since the raising of the import duty on gold to 10 percent, up to 120 tonnes of the yellow metal was smuggled into the country in 2016. With the introduction of the Goods and Services Tax on July 1, industry sources say they expect the higher retail price of gold jewellery would likely increase smuggling.
A lower import duty would reduce the incentive to smuggle gold.
https://www.gemkonnect.com/news/reduced-trade-deficit-india-could-lower-import-duty-gold