The government on Monday hiked the import duty on gold and platinum from 4 to 6 per cent with immediate effect in an urgent bid to curb imports of the precious metals and contain the widening current account deficit (CAD).
In a twin-policy remedial package aimed at checking the runaway rise in gold imports, which has been adversely impacting the CAD since last fiscal, the government also announced its decision to link the Gold ETFs (Exchange Traded Funds) with Gold Deposit schemes as a measure to increase the supply of physical gold in the market without resorting to imports.
“The government has decided to increase import duty on gold and platinum from 4 per cent to 6 per cent with immediate effect,” Department of Economic Affairs Secretary Arvind Mayaram said here.
The government, Dr. Mayaram said, would effect consequential changes in the additional customs duty and excise duty on gold ‘dore’ bars, gold ores and refined gold.
“The duties will be reviewed after some time if there is a moderation in the quantity of gold that is imported...,” he said.
Even as it will take some time to assess whether the bitter pill has yielded the desired results, the immediate fallout was an increase in the price of gold by Rs. 315 at Rs. 31,250 per 10 grams.