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India precious metals duty hike to hit import revival

The government's move to raise customs duties on precious metals will impact imports of the metals that were beginning to bounce back after a sharp fall in 2009, traders and analysts said on Friday.

business Updated: Feb 26, 2010 14:54 IST

The government's move to raise customs duties on precious metals will impact imports of the metals that were beginning to bounce back after a sharp fall in 2009, traders and analysts said on Friday.

Finance Minister Pranab Mukherjee in his 2010/11 budget on Friday raised the duty on imports of gold and platinum to 300 rupees ($6.5) per 10 grams from 200 rupees earlier.

On silver, Mukherjee proposed a new duty of 1,500 rupees per kg from 1,000 rupees earlier.

"Already the bullion industry has seen so much loss. This will further hurt the industry," said Suresh Hundia, president of the Bombay Bullion Association (BBA) from Mumbai.

Local prices reacted on the Multi Commodity Exchange of India (MCX) with silver rising by over 1 percent after the announcement, while gold witnessd a smaller move.

"Imports should remain the same a last year," said T Gnanasekar, director, Commtrendz Research from Mumbai.

In 2009, gold imports were at 339.8 tonnes down 19 percent from a year ago with volatile and record high prices denting consumers' appetite for the metal in the world's largest market for gold, data from the BBA shows.

In January and February, slightly stable international prices made imports bounce back.