Govt may take steps to curb gold imports

The government is likely to take certain policy measures to curb high gold imports instead of raising customs duty on the precious metal, sources said.

The effort is a part of the exercise by the government to check fall in rupee value and control current account deficit (CAD).

“There is not much scope for hike in import duty on gold. Rather, it would be some kind of policy measures to reduce gold import. Higher import duty on gold may increase smuggling activities,” they said.

With festive season around the corner, hiking import duty on gold at this juncture might lead to increase in smuggling.

However, the sources did not specify those policy measures. The government last week announced an array of steps, including removal of withholding tax on Masala bonds, relaxation for foreign portfolio investments, and curbs on non-essential imports, to contain the widening CAD and check the rupee depreciation.

According to traders and experts, if the government wants to impose curbs on non-essential items, they can consider products such as gold, high-end electronics goods, refrigerators, watches, and high-end footwear and garments.

Gold imports jumped by about 93 per cent in August and 41 per cent in July. With the forthcoming festive season, demand for gold is expected to grow further.