India not to cut gold import duty as current account deficit balloons.

NEW DELHI India’s finance ministry on Friday said it is not considering any proposal to slash import duty on gold in view of country’s current account deficit (CAD) position.

“At present, there is no proposal under consideration to reduce the import duty on gold, taking into account the likely impact on the current account deficit,” Minister of State for Finance JD Seelam told the Lok Sabha in a written reply.

In 2013, the government hiked import duty thrice to 10 per cent on import of gold in wake of high CAD which in turn was impacting the value of the rupee. The Reserve Bank of India too imposed a series of curbs to restrict gold imports.

The current account deficit had touched a record high of $88.2 billion in 2012-13. However, following series of measures, by both the RBI and the government, the current account deficit is likely to fall below $50 billion in the current financial year ending March 31.

Gold imports, which had peaked to 162 tonnes in May, came down to 19.3 tonnes in November after the government hiked import duty thrice in 2013, taking it to 10 per cent.

Finance Minister P Chidambaram had recently said the restrictions on gold imports will be reviewed by March end. The government collected Rs75.9 billion revenue in form of import duty on gold during April-December 2013. In 2012-13 fiscal, the collection was Rs104.63 billion.

Authorities have admitted that curbs were leading to gold smuggling. There has been about 1-3 tonnes of gold smuggled into the country every month following the restrictions imposed on shipment last year. In value terms, gold and silver imports in April-December period declined 30.3 per cent to $27.3 billion from $39.2 billion during the same period a year earlier.

In the first half (April-September) of current fiscal, the current account deficit narrowed to $26.9 billion (3.1 per cent), from $37.9 billion (4.5 per cent) in the first half of 2012-13.

Source : omantribune.com