Even though the government is looking to bring down import duties on gold from the current level of 10% before the country goes for general elections, it is unlikely that the duty will be brought back to the original level of 4%. In fact, the rollback is likely to happen in tranches.
“The government is looking into the issue and there will be some reduction in import duty as the current account deficit has also come down to a comfortable level but it may not be brought back to the original level immediately,” an official source who refused to be identified told HT.
The All India Gems and Jewellery Trade Federation had earlier written to UPA chairperson Sonia Gandhi demanding a reduction in import duty on gold to 2% from the current 10%. The industry body had also demanded a relaxation of the Reserve Bank of India’s 80:20 rule on gold imports, wherein merchants have to re-export 20% of each gold consignment before placing orders for a fresh shipment.
Sonia Gandhi’s office had forwarded the demand to commerce minister Anand Sharma.
The government raised the import duty on gold after the current account deficit — the difference between inflow and outflow of foreign currency — touched a record high of 4.8% of GDP in 2012-13 primarily on account of rise in oil and gold import.
However, with goods news likely on the CAD front, the import duty on gold may come down. Economic affairs secretary Arvind Mayaram said last week that CAD would be contained below $50 billion in 2013-14. The RBI too has estimated CAD to remain below 2.5% of GDP in the current fiscal year.
The government is also looking at a full-fledged plan to address the problem of rising gold imports, the official said. Several industry bodies and gold associations have suggested that one of the ways to tackle the issue is to introduce gold deposit schemes.