New Delhi: The government on Monday hiked the import duty on gold by two per cent and announced a modification in the gold deposit scheme to curb the rising gold demand in the country.
“The government has decided to increase import duty on gold and platinum from four per cent to six per cent with immediate effect,” said department of economic affairs secretary Arvind Mayaram.
Gold prices soared by Rs 315 to trade at Rs 31,250 per 10 grams after the government increased the duty.
The propensity of Indians to buy gold has increased its import and this has widened the current account deficit.
Gold imports in 2011-12 amounted to $56.5 billion and in the current fiscal year upto December, 2012, gold imports are estimated at $38 billion. This has been putting pressure on the already stressed balance of payment of India.
The government has also proposed to provide a link between the Gold ETF (exchange traded fund) and the gold deposit scheme to curb the import of the yellow metal.
Mayaram said that the objective is to release a part of the gold physically held by mutual funds under gold ETFs and enable them to deposit the gold with banks under the gold deposit scheme.
“The advantage will be that a part of the gold lying in stock will be brought into circulation and will partially meet the requirements of the gems and jewellery trade. It is hoped that, consequently, there will be a moderation in the quantity of gold that is imported into the country, said Mayaram.
He said that apart from gold ETFs, the changes proposed to the gold deposit scheme will make it attractive for individuals to deposit their idle gold with the banks under the scheme.
The secretary said that the minimum quantity of gold that may be deposited will be reduced and the minimum tenure of deposit will be reduced to six months from the present stipulation of three years. Banks have been advised to notify the changes in the gold deposit scheme.