- Gold imports in India have declined after the recent increase in import duties, government sources say
- The overall import tax on gold and silver rose from about 6% to over 15% in May
- The duty hike includes a 10% basic customs duty and a 5% agriculture infrastructure cess
The impact of the higher gold import duty introduced last month is starting to show, with gold imports witnessing a decline, according to government sources.
The moderation in imports suggests that the duty increase is beginning to influence demand and import trends, marking an early effect of the government's latest measure aimed at curbing inbound shipments of the precious metal.
The overall import tax on gold and silver in India has been significantly raised from about 6% to over 15% in May. The action is anticipated to increase domestic gold prices and put jewellery companies under short-term pressure.
The import tax on gold and silver has been increased by the government from 5% to 10%. Imports are subject to 1% agriculture infrastructure and development cess in addition to 5% basic customs duty, making the total duty close to 6%.
Following the amendment, imports will be subject to a 5% agriculture infrastructure and development cess in addition to a 10% basic customs duty. As a result, the overall import tax is now close to 15%.
Additionally, under a set quota system, the government has raised the levy on gold imports from the United Arab Emirates. Before this quota, gold imports were subject to reduced duty rates.
In an effort to stabilise the currency, the government intends to cut back on gold imports. Increased import duties raise the landed cost of gold, which could deter people from buying jewellery and bullion.
In the upcoming months, fewer gold imports are anticipated as a result of the action. For weddings and other significant events, cautious need-based purchasing is probably going to persist. This is anticipated to be a short-term solution as global concerns persist.
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