(Bloomberg) -- Jewelers in India breathed a sigh of relief after the government is said to have ruled out raising import taxes on gold to curb a slump in the local currency. Gold futures in Mumbai rose and shares of Titan Co., India's largest maker of branded jewelry by market value, pared losses.
The country isn't planning to raise the tax on gold imports from the current 10 percent as it may lead to an increase in illegal shipments into the world's second largest consumer, said the people with knowledge of matter, who did not wish to be identified as discussions were private. A commerce ministry spokeswoman declined to comment.
With reports floating around that the government may tinker with the duties to curb a widening current-account deficit and arrest the rupee's fall in line with similar measures taken in 2013, jewelers feared that any increase in tax would hit demand during the ongoing peak festival and wedding season. India imports almost all the gold it consumes.
Gold futures in Mumbai rose as much as 0.6 percent on Monday, the first increase in four days. Titan pared losses of as much as 3.4 percent on Monday to trade 1.1 percent lower in Mumbai amid a broader stock market weakness.
The finance ministry is also planning a gold deposit program aimed at attracting bullion lying with citizens. Apart from this, an inter-ministerial group last week also discussed steps to attract gold deposits from temple trusts, the people said.
In November 2015, India had unveiled a plan to encourage individuals and temples to deposit some of their gold, totaling about 20,000 tons, with banks as part of a strategy to curb demand for imported bullion, which was partly blamed for a record current-account deficit five years back.
--With assistance from Swansy Afonso.
To contact the reporters on this story: Archana Chaudhary in New Delhi at achaudhary2@bloomberg.net;Shruti Srivastava in New Delhi at ssrivastav74@bloomberg.net
To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net, Unni Krishnan, Karthikeyan Sundaram
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