Import tariff value of gold has been raide to $461 per 10 grams and of silver to $803 per kg
The government, on Friday, raised the tariff value on gold imports while the Forward Markets Commission (FMC) hiked the margins on the commodity in futures trading, twin steps to control in-bound shipments of the precious metal and check volatility in its trading.
These measures come on a day when Prime Minister Manmohan Singh said that India needed to reduce its appetite for gold. “Clearly we need to reduce our appetite for gold, economise the use of petroleum products, and take steps to increase our exports,” Dr. Singh said while making a statement in Parliament on the state of economy.
“In 2010-11 and the years prior to it, our current account deficit was more modest and financing it was not difficult, even in the crisis year of 2008-09. Since then, there has been a deterioration, mainly on account of huge imports of gold, higher costs of crude oil imports, and recently, of coal,” he said.
The Central Board of Excise and Customs (CBEC) raised the tariff value of gold to $461 per 10 grams from $432. The tariff value is the base price on which the customs duty is determined to prevent under-invoicing.
The FMC hiked initial margins in gold futures to 5 per cent besides an additional margin of 5 per cent on all the gold, effective September 2. A margin is the amount of cash an investor must put up to open an account to start trading.
The FMC said: “In the light of the recent volatility observed in the prices of gold, the Commission has decided to raise the initial margin in respect of gold contracts. The exchanges are directed to impose initial margin on gold contracts at the rate of 5 per cent of the value of the contract....”
The twin move comes in the wake of prices zooming to an all-time high of Rs.34,500 per 10 grams with a biggest ever one-day surge of Rs.2,500 on August 28 as the rupee hit a historic low of 68.75 a dollar. Prices have risen 9 per cent so far in August.
The impact of twin steps was visible in the market as gold futures prices on Friday slipped below the Rs.33,000-mark to Rs.32,774 per 10 grams at MCX. In spot markets, it closed at Rs.31,700 per 10 grams in New Delhi.
The FMC also imposed an additional margin of 5 per cent on all the gold, silver, brent crude oil, crude oil and natural gas contracts traded on national exchanges till further orders.
The FMC raises margins in the light of volatility in prices.