Unabated gold smuggling to India incites import duty hikes in neighborhood

30 Aug 2013 Last updated at 08:19:49 GMT
 
MUMBAI (Scrap Monster) : With more Indians trying to bring gold through neighboring countries, the next-door countries are forced to take measures to curb their own gold imports. There have been several attempts to transport gold to India across the border. The government of Nepal plans to jack up the import duty on gold to match prices in India.

The import tariff for gold in Nepal had been much lower when compared with India. The customs duty was hiked from Rs 3,000 to Rs.3, 600 for 10 grams of gold during the budget for the current fiscal year which was presented last week. The customs duty for 10 grams of gold in India is Rs 4,480 per 10 grams. This essentially means that there exists a difference of Rs.880 in import tax between the two countries. In other words, the disparity in import tax makes gold in Nepal cheaper by Rs.880 per 10 grams.

Nepali gold traders have been constantly urging the government to raise the import duty on gold to Rs 4,400 per 10 gram so that it is equivalent to the Indian import duty. The Finance Ministry has proposed to fix the tariff which will keep the gold prices in the country slightly higher than in India. By way of this, the country plans to put breaks on the acts of gold smuggling across the border which in turn will alleviate the gold shortage in domestic market.

Recently 35 kilograms of contraband gold bought from China was seized at the Indo-Nepal border. In a separate incident, Armed Police Force had arrested two Indian nationals attempting to transport nearly 10 tolas of gold to India across the border.

Author: Paul Ploumis