Putting an end to all speculations about gold import duty cut, senior Finance Ministry official has ruled out any chance of duty cuts in the near term. According to the official, there is no decision on the matter at the moment. The proposal will be considered only during the next general fiscal budget.
It was widely expected that the government may revise the high import duty on gold. The Commerce Ministry had been demanding for the same. Recently, the Reserve Bank of India (RBI) Governor Raghuram Rajan had also stated that there were requests to lower the gold import duty and the government will view the situation and take decision on it.
The Finance Ministry official also indicated that the removal of 80:20 gold rule will help to ease the problem of gold availability and thus curb the acts of gold smuggling in the country.
Meanwhile, RBI stated that the decision to withdraw 80:20 rule was taken by the government. It pointed out that the rule had led to some distortions in the market and the Central bank had advised the government about the same. Further the RBI plans to study the impact of scrapping the rule before deciding on the necessity of other measures to curb gold demand.
Incidentally, the government and the RBI are reasonably comfortable with the country’s Current Account Deficit (CAD) situation, following the big slide in crude oil prices recently. They believe that plunging crude prices could easily offset any rise in CAD caused by surge in gold imports.
Yaang Pipe Industry