: Govt hikes gold import duty to 15% #FinanceIndia #StockMarketNEWS #Business Press Trust of India New Delhi The government has hiked gold import duty to 15% from 10.75% to check the current account

@StockMarketNEWS Mon 04 Jul, 2022

Posted in: #FinanceIndia #StockMarketNEWS #Business

Govt hikes gold import duty to 15% #FinanceIndia #StockMarketNEWS #Business
Press Trust of India

New Delhi

The government has hiked gold import duty to 15% from 10.75% to check the current account deficit (CAD) and rising import of the yellow metal.

The duty changes came into effect on June 30.

Earlier, the basic customs duty on gold was 7.5%, now it will be 12.5%. Along with the agriculture infrastructure development cess (AIDC) of 2.5%, the effective gold customs dutywill be 15%.

Finance Minister Nirmala Sitharaman said India does not produce much gold. So, the import of yellow metal put stress on thecountry’s forex.

“Gold is inelastic in its demand. So, you would want to see whether you can at least try to discourage to that extent people importing. Or if you are importing and you still want to import, please pay up that much more so that country can have some revenue,??? she said.

There has been a sudden surge in imports of gold. In May, a total of 107 tonnes of gold was imported and in June also, it was significant. The surge in goldimports is putting pressure on the current account deficit, the financeministry said.

With the outflow of foreign portfolio investment and costlier imports, the foreign exchange reserve of the country has seena decline.

Since the war in Ukraine broke out in late February, the RBI has expended its foreign exchange reserves in order to shield the rupee from steep depreciation. Since February 25, the headline foreign exchange reserves have declined by .94 billion.

The current account deficit (CAD) is expected to widen to 3% of GDP in FY23 against 1.2% in the previous fiscal.