Indian minister wants lower import duty on gold

The Indian Minister of Commerce has made a proposal to reduce the import duty on gold from ten to two percent. A lower import duty is beneficial for all jewellers in India, because it allows them to buy gold cheaper. In 2013, the import levy was gradually increased in order to reduce the deficit in the balance of payments.

However, it remains to be seen whether his proposal will receive the support of the Ministry of Finance. This week, the government unveiled a new savings program, designed to curb gold imports and Buy gold discourage the population.

The Indian government and central bank are still unable to get a grip on the gold market. The increase in import duties has mainly led to an increase in illegal gold smuggling in recent years. All attempts to collect gold from households through savings programs did not actually get off the ground.

India struggles with gold

It is striking that even within the Indian Government there is no agreement on the issue of gold. Attempts to discourage the purchase of gold, such as the import quota and a ban on the import of Gold Coinsdid not produce the desired result.

"It is counterproductive to reduce the import duty. The government will first see if the new savings program is successful and only then will it make a decision. But for the time being, nothing is being done," a spokesperson for India's Ministry of Finance told Reuters.

Research firm Thomson Reuters GFMS is also skeptical about lowering the import duty. Analyst Sudheesh Nambiath had this to say about that: "If the import duty is reduced by eight percent, why would you still participate in the savings program and hand in your gold? I am sure that the Chancellor of the Exchequer, who would like to see the savings programme a success, will take that into consideration before deciding to reduce the import duty.