India, world’s second largest gold consumer, is
unlikely to make any revision in gold import before the Budget, according to a
top finance ministry official.
There has been widespread expectation of reduction
in customs duty on gold due to the improved current account deficit situation.
The commerce ministry has also been pitching for a cut in import duty on the
precious metal. General Budget for the coming fiscal is generally announced on
the last working day of February.
Earlier this week, RBI Governor Raghuram Rajan had
also said that there were some requests to change the duty structure on gold
and that government will view and take a decision on it. The then government in
2013 had increased import duty on gold to 10 percent following rising current
account deficit (CAD) mainly due to import of gold.
Speaking about the removal of 80:20 restrictions, the
official said it is enough to ease the problem of gold availability and this
will curb the problem of smuggling that was taking place. Besides, the CAD
situation is fairly comfortable and therefore there was no need to continue
with it, the official added. The 80:20 gold import curbs were put in place in
August 2013 to curb high gold inflows that was leading to widening CAD.
Last month, the government decided to scrap this
scheme as it was creating distortions. Under this scheme, at least 20 percent
of the imported gold had to be mandatorily exported before bringing in new
lots. The surprise move came at a time when the industry was actually expecting
more curbs on imports of gold, which is seen as an unproductive
asset-attracting household savings away from the financial markets.
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