Indian officials are considering lowering the country’s levy on imported gold.To keep the value of the rupee stable, a rise in customs duty was put in place earlier this year.
Bloomberg reported on Monday that sources said New Delhi is thinking about reversing its recent decision to raise the tax on gold imports. This would stop the metal from coming into the country illegally. The report says that the trade ministry is thinking about cutting the tax from 12.5% to 10%. Sources say that the step could be announced when the budget is shown at the beginning of next year or even sooner.
In July, India raised the tax on gold imports from 7.5% to 8%. The goal of the measure was to stop people from buying the metal so that the Indian currency could stay stable. At the time, high inflation and trade imbalances led to a record drop in the value of the rupee. According to data from the World Gold Council, India’s gold imports dropped 23% from July to September of this year compared to the same time last year.
But almost as soon as the levy was put in place, people started to say that it would lead to more smuggling, and many people asked the government to change its mind. According to experts, a higher import tax harms India’s gold industry by increasing the amount of goods brought into the country illegally.
“The duty should be between 4% and 6%.” This way, the government will get enough money, and there won’t be any illegal trade.” Ashish Pethe, the head of the trade group in Mumbai, told the news source
India is the second-biggest consumer of gold in the world, after China. The jewellery industry is a big reason for this. The Ministry of Commerce and Industry says that India brought in 651,242 metric tonnes of gold in the 2020–21 financial year. These imports were worth $34.62 billion in 2010 and will be worth $46.14 billion in 2021–22, which is a 33% increase. The country’s Directorate of Revenue Intelligence (DRI) said on Monday that so far this fiscal year, it has seized over 833 kilogrammes of illegal gold worth $49.5 million.
