India's tooth and nail fight to triumph the uphill battle against gold imports

NEW DELHI (Scrap Monster) : The Indian government authorities are seen leaving no stones unturned in its battle against gold imports. Every business day has in store, some or other fresh announcements of government regulations.

The Ministry of Finance yesterday announced its decision to hike the gold and platinum import duty to 8%, a huge hike of almost one-third of the prevailing 6% import duty. This is the second straight hike since January. The move is considered to be part of government’s deliberate attempt to rein in gold import, which accounts for almost 80% of the country’s current account deficit (CAD).

The continuous efforts by the RBI and the Government of India have failed to deliver so far. The gold and silver imports surged by 138% in April. There seems to be no respite with May imports feared to be around 162 tonnes, almost 15% higher than April imports. The WGC forecast that gold imports in April to June quarter would be in the range 300-400 tonnes, prompted the government to act instantly.

The steep hike in import duty is expected to taper out the gold import. At the same time, experts see remote possibility of further hike in import duty as any such move would unfold avenues of illegal gold traffic to the country.