Indian gold imports could fall 25 pct on duty hike
Bachhraj Bamalwa said he believes import duty on gold will be hiked to 6 percent in the budget scheduled for Feb. 28. The rate was doubled to 4 percent last as part of moves to cut India's trade deficit.
"Going by the government's attitude towards gold and the Reserve Bank of India's latest recommendations, we fear gold imports will be further curtailed by at least 20-25 percent compared to last year," he said in an interview with the Reuters Global Gold Forum.
"The increase in duty will make gold costlier in India, and at this price investors will not be interested in gold, keeping in mind that the Indian rupee is also constantly weakening."
India's finance minister P. Chidambaram reignited speculation for another duty hike earlier this month, hinting at cutting gold imports to resolve a record current account deficit that he referred to as "worrying".
Gold is often used as an investment asset by Indians, but represents a drain on foreign currency reserves. A senior finance ministry official told Reuters the government could increase the import duty on gold by 1-2 percentage points.
The most active gold contract on the Multi Commodity Exchange outperformed a 10 percent rise in spot gold last year to climb nearly 13 percent, hitting a series of record highs above 32,000
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