India’s Trade Secretary Rajeev Kher has confirmed the trade ministry supports reducing gold import duties.
Mr Kher, commenting after the release of the country’s latest export figures, said he and his department encourage changes that would positively affect the precious metal markets.
He stated: “The ministry is in favour of rationalisation of gold import tax and rules related to gold import.”
However, Mr Kher did not mention whether this recommendation had been passed on to the ministry of finance, which has authority over such matters.
India’s gold import duties reached 10 per cent last year, as the country sought to lower its large trade deficit caused by massive imports.
Buying gold is exceedingly popular in India, where it is used to make jewellery and offered as a gift at special occasions. On the other hand, this caused the current account deficit to climb to historic levels last year.
Consequently, India’s currency value fell to its lowest ever level in autumn 2013. As such, successive increases to gold import taxes saw charges rise from 2 per cent to 10 per cent over the course of the year.
Trade ministry data from Wednesday (June 11) showed the amount of gold coming into the country slumped 72 per cent in May compared with a year earlier. However, this still represented $2.19 billion worth of imports.
As India’s current account deficit begins to shorten, industry commentators have suggested the federal government will look to lower gold import duties to revitalise the precious metal market.
It is hoped this will also reduce gold smuggling and imports coming through other unofficial channels – a problem that has become particularly prevalent since taxes increased.
Nevertheless, Mr Kher said a 12 per cent year-on-year improvement in India’s exports is an “encouraging sign”.
“If the trend continues next month, we will be able to say with certainty that global demand is reviving,” he explained.
