Gold consumer rooms may lower its import duty on gold due to the fall in trade deficit a commerce ministry official said on Thursday. Reducing import duty in gold would result gold cheaper in local market and could increase demand, also global prices of gold trading near six week high. Spot gold prices are rebounding this month after posting their first monthly loss for 2017 in June.
A lower import duty would also help in controlling gold smuggling,”Now the current account deficit is improving and this decision (to reduce import duty) should be taken into the budget,” India’s commerce ministry said on the sidelines of a conference.
The commerce ministry is recommending a reduction in the gold import duty to the finance ministry, although it was not clear how soon a decrease could be enacted.
As import of gold nearly halved from a month earlier, India’s trade deficit also narrowed more than expected to 12.96 billion dollar in June.
The commerce ministry has “been saying the ideal rate for the industry would be 2 percent. It can be brought down in a phased manner or in one go,
Gold smuggling has been rife since India raised the import duty on the metal. The World Gold Council estimates that up to 120 tonnes of gold was smuggled into India in 2016.
India’s legal imports typically stand at around 800 tonnes a year, with gold and gold jewelry used as religious donations, and wedding and holiday gifts, or as investments that can be readily turned into cash.
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