Gold, Silver Imports Get Costlier! India Hikes Duty To 15% In Midnight Action

On the back of increasing imports and an attempt to safeguard the dwindling foreign exchange reserves, the government of India has increased the import duty of gold, silver and other precious metals to 15% from 6% at midnight.

This development takes place just a few days after Prime Minister Narendra Modi asked citizens to avoid gold purchases for a year and to limit the non-essential import of items given the West Asia crisis and increasing crude oil prices.

Experts predict that the short-term effects will be decreased jewellery demand, resurgence in the number of smuggling routes and alteration in the trade routes of bullion.

Imports of gold turn out expensive overnight To curb India’s increasing foreign exchange outgo, the Centre has raised the import duty on gold and silver to 15% from the original 6%.

According to the Central Board of Indirect Taxes and Customs (CBIC), they have notified this change, which will take effect at midnight.

The import duty would constitute a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC).

The new rates came into force at midnight.

The higher duties will also apply to imports of platinum and jewellery and industrial imports linked to precious metals.

Gold imported from the UAE under the fixed-quantity quota system will now be subject to the same duty structure, doing away with the earlier concessional treatment.

This comes at a time when India is under pressure on its foreign exchange reserves due to high crude oil prices and geopolitical disruptions arising out of the US-Iran conflict in West Asia.

Why did the government raise the gold import duty? A key concern for policymakers in times of global uncertainty is forex management, given that India imports most of its gold requirements and 85% of its energy needs.

This is the latest move a day after Prime Minister Narendra Modi on Sunday appealed to citizens to refrain from buying gold, cut fuel consumption, avoid destination weddings abroad and limit non-essential foreign travel.

“Global supply chains were already under stress after the Covid pandemic and Ukraine conflict, and the ongoing tensions in West Asia have worsened economic risks further,” said PM....