Will Import Duty Reversal Curb Overmounting Gold Smuggling in India?

Author: Paul Ploumis03 Jun 2014 Last updated at 07:44:42 GMT

NEW DELHI (Scrap Monster): The gold smuggling in India has been escalating dangerously as the Reserve Bank of India has yet not taken away the prevailing 10 percent gold import duties.

According the Directorate of Revenue Intelligence (DRI), there has been a 446 percent spike in yellow metal smuggling into India in 2014 while comparing to 40 cases and a seizure of gold worth `44.80 crore in 2013.

Last year, the RBI hiked import duty on gold thrice, up to 10 per cent, to curb the demand for the precious metal and to rein in an escalating current account deficit (CAD).

It is reported that India’s current account deficit declined sharply to $1.2 billion, or to a mere 0.2 per cent of Gross Domestic Product (GDP), in the fourth quarter of 2013-14. CAD was standing at $18.1 billion, or at 3.6 per cent of GDP, in the same quarter of the last fiscal.

The newly sworn-in government has showed positive cues by permitting private agencies to import more gold under 80:20 norms. Yesterday, it had slashed the import tariff value on gold and silver to USD 408 per 10 grams and USD 617 per kg respectively, in view of the weakness in bullion prices globally.