WGC expresses concern over India's decision to hike gold import duty

NEW DELHI (Scrap Monster) : The Indian division of the World Gold Council (WGC) expressed deep concerns over the government’s decision to hike the gold import duty for second time in a row during this year.

According to the WGC, the fresh hike in gold import duty would curb the supply of gold, thus leading to price increase and gold smuggling in the country. The retail demand for gold in the country would continue to remain robust. The total gold imports by the country during 2012 were 860 tons. During the initial five months of the year, the imports have already crossed 500 tons. Supply restrictions would be harmful for the country in the long run, as this may open up unauthorized supply chains. As most of the domestic gold demand of the country is met by imports, the prices of gold could go higher.

The Finance Ministry and the Reserve Bank of India (RBI) had in the recent past announced a string of measures to put tight control over increasing gold import. The gold import duty was hiked twice. The banks and nominated agencies were strictly asked to restrict gold imports to meet the demand of jewellery exporters alone. In the latest of the series of reforms, the RBI extended its restrictions on gold loans to co-operative banks of the country.