Surprise increase in Indian gold import duty; industry fears surge in smuggling

Section:

By Rajendra Jadhav
Reuters
Friday, July 5, 2019

MUMBAI, India -- India today raised the import duties on gold and other precious metals in a surprise move that industry officials say could dampen retail demand and boost smuggling in the world's second-biggest bullion consumer.

Lower demand from India could weigh on global prices that are trading near their highest level in six years.

... Dispatch continues below ...


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Jewellery trade associations have asked India's government to reduce gold import duties, which have caused a surge in smuggling.

The government instead hiked the duty to 12.5% from 10% as policymakers try to bring down the fiscal deficit and recapitalise banks.

"This is a shocking move. We were expecting reduction in the custom duty," Anantha Padmanabhan, chairman of All India Gem and Jewellery Domestic Council, told Reuters, adding that the hike has effectively raised smugglers' margins.

Gold smuggling surged in India after the government raised the import duty to 10% in August 2013. Gray-market operators -- businesses that smuggle gold from overseas and sell it in cash to avoid the duties -- got a further boost in 2017 when India imposed a 3% sales tax on bullion. ...

... For the remainder of the report:

https://www.reuters.com/article/india-economy-budget-gold/update-1-india...

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