The Union government is likely to de-incentivise gold imports to prevent the rupee from going into a tailspin like August last year, when the currency plummeted to the 69 per dollar level.
Talks are going on in the finance ministry about how to curb gold imports, especially when imports have registered a 300% increase over last October – a development that may affect current account deficit (CAD) and foreign exchange reserves.
A top finance ministry source told dna, "The matter of gold imports is under discussion. No decision has yet been taken."
The debate currently underway is whether to increase the import duty (10% at present) on gold or to do away with the relaxation granted to bullion trading houses and impose a moratorium on imports by them.
Consumers will have to shell out more for the yellow metal. According to industry estimates, a two per cent hike in import duty jacks up gold prices by at least Rs 70-80 per gram.
In July last year, gold trading firms were barred from importing the metal. However, the golden gates were opened for them a few months after the ban was imposed. In a form of relaxation, an 80:20 scheme was doled out to bullion importers, which entitled them to import the yellow metal on the condition that 20 per cent of the imported shipment be re-exported after due value addition to the commodity.
"It remains to be seen whether import duty is increased or a ban is imposed on import. Imposing a ban on the commodity runs the risk of smuggling of the commodity into the country," said the official. The government is expected to make an announcement soon.
Large confiscation of illegal gold points to the smuggling that has become rampant in the last one year. Mumbai airport seized 604 kg of gold between April and September this year, which was 900% more from the 70 kg seized in the airport in the corresponding period last year.
Over the last one year, the country, which is the second largest importer of gold, has literally guzzled the commodity. Gold imports grew to Rs 25,200 crore this October, compared with the same month last year.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}