Author: Paul Ploumis11 Jun 2014 Last updated at 08:20:18 GMT
NEW DELHI (Scrap Monster): The Indian Commerce Ministry has proposed to cutback the prevailing high gold import duty structure and to implement necessary modifications to the existing 80:20 gold import procedures. The recommendations were forwarded to the Finance Ministry during the pre-Budget meeting held between the two ministries at New Delhi.
Commerce Secretary Rajeev Kher while addressing a press conference after the meeting announced that the Ministry is in favor of reducing the gold import duty from 10% to lower levels. Considering the fact that the Current Account Deficit (CAD) is much lower when compared to previous year, the government has enough room to go for partial cutback of gold import duties. According to Rajeev Kher, since the country’s gold imports have plunged by 72% during May, it is the right time to ‘rationalize’ the duty on gold imports.
The Commerce Secretary also called for restoration of normalcy in gold import procedures. The methodology of operating the controversial 80:20 scheme needs to be revised to the benefit of the gold industry, he added.
The pro-gold Modi led new government is expected to announce favorable decisions in its maiden budget which is to be presented in the Parliament during next month. The trade bodies too have demanded withdrawal of duties on gold import to save the industry from the verge of collapse.
The previous Congress-led government at Centre had raised the gold import duties from 2% to 10% during 2013 in a bid to curb rising CAD. The lack of clarity in RBI’s 80:20 rule also had restricted gold imports into the country. This in turn had led to scarcity of gold and had spiked up gold smuggling in the country.