NEW DELHI (Scrap Monster): According to senior officials in the Indian Finance Ministry, the import duty on gold imports is likely to witness a cut of 2% to 5%. The announcement by Finance Minister Arun Jaitely is likely to come during presentation of the first budget by the newly elected government led by Narendra Modi.

The Finance Ministry is expected to follow a progressive strategy in bringing down the high gold import duty. As a first step, it plans to curtail the duty by 2%. Any further action will be taken after closely monitoring the country’s foreign exchange situation. Sources indicate that duty cut in the range 2%-4% is under the consideration of the Ministry, the final announcement of which will be made by the Finance Minister while presentation of the Union budget in early-July.

The softened CAD data offers much room for the Ministry to lower the gold import duty. The CAD had narrowed to 1.7% of GDP in 2013-’14 compared with 4.7% in the financial year before that. The RBI had made it clear that it is willing to take bold steps on gold imports by allowing star and premier export houses to trade-in the yellow metal.

The Industry body Assocham had urged the government to cut gold import duties by 5%. Even a cut in the range 2%-4% may give the domestic gold industry in the country, a handful of reasons to cheer about. This in turn may also slash hefty gold premiums in India and lower domestic gold prices.

The Ministry officials also indicated chances of the new government revisiting the 80:20 curbs at a later stage.