India to Announce New Policy Actions to Curb Rising Gold Imports
Also, CAD has widened to 2.4% of the Gross Domestic product (GDP) during the initial quarter of fiscal year 2018-’19.
As part of new steps to arrest fall in currency and control the widening current account deficit (CAD), the Indian government plans to adopt new policy steps to curtail gold imports, which causes heavy dollar outflow.
According to government sources, there are no plans whatsoever to hike import duty on gold at the moment. This is mainly on account of fears that such an action would trigger smuggling activities. Incidentally, smuggling activities are already on the rise, ahead of the upcoming festive season. In addition, the government may not prefer a hike in import duty, especially at a time when the next general elections are around the corner.
Meantime, government sources declined to specify the policy actions to be taken to check rupee depreciation and CAD widening. It must be noted that the Indian rupee has declined nearly 6% in August alone. Also, CAD has widened to 2.4% of the Gross Domestic product (GDP) during the initial quarter of fiscal year 2018-’19.
The country has recorded tremendous surge in gold imports recently. The imports skyrocketed by nearly 93% during August. Furthermore, the demand is expected to peak during the festive season.
Speaking to media, Surendra Mehta, Secretary, India Bullion & Jewellers Association said that the gold industry is currently not looking at any curb, as restrictions on gold import are likely to affect market. He suggested rising of duty on gold dores from current 9.35% to make it equivalent with the prevailing 10% duty structure for gold bar imports into the country.
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