‘Gold imports may drop 5-10%, but duty hike can’t be the solution’
Surabhi: Jan 23 2013, 00:44 IST
A day after it hiked the import duty on gold and platinum to 6 per cent, the finance ministry on Tuesday also raised duty on gold dore bars and ores from 2 per cent to 5 per cent. The move is expected to help check the current account deficit that touched 4.6 per cent of the GDP in the first half of the fiscal. But Prithviraj Kothari, Managing Director, RiddiSiddhi Bullion believes that its impact would be limited as the demand for gold due to marriages would still continue. The former president of Bombay Bullion Association tells Surabhi in an interview that gold prices are likely to rise over the next three months as it continues to be the safest investment avenue. Excerpts:
Will the import duty hike on gold and platinum help curb import demand?
I don’t think the two percentage point hike in import duty will have much impact. It will be offset by the Rupee appreciation of 2 per cent. There may be a 5 to 10 per cent drop in gold imports, but duty hike can not be the solution. There are about 10 million marriages in India every year, and 70 per cent of the demand comes from rural areas where people don’t have demat accounts or credit cards.
What will be the impact of the duty hike on gold dore bars and ores from two per cent to five per cent?
Dore bars are raw, unprocessed gold. Several mines and refineries in India can get special license to
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