The Indian Finance Ministry announced a hike in the basic import duty of gold from 7.5 percent to 12.5 percent. According to some analysts, the decision was announced keeping in mind the tumbling Rupee and the country’s growing trade deficit as it widened to a record high last month.
In a year, India’s trade imbalance increased from $6.53 billion to $24.29 billion, according to figures made public by the government. Compared to the same period last year, the trade imbalance for the first two months of the current fiscal year increased to $44.69 billion from $21.82 billion. The rupee hit a record low of Rs 79.12 versus the US dollar on Friday as a result of the increasing trade deficit and ongoing outflow of foreign capital.
India is the world’s second-largest gold consumer, behind China. The nation imports the majority of the gold it needs, and the jewelry industry is mostly responsible for this. Vibes of India talked to Ahmedabad city’s top Bullion Merchants and Jewelers to know about the impact of the Government of India’s decision to increase customs duty.
Bullion Merchant and owner of Ambica Touch Nishant Dholakia told Vibes of India that as an immediate effect the rate of Gold has increased by around 5 percent. According to him, there are two sides to it, one is that the portfolio of anyone with gold immediately increased by 5 percent, so it’s good for anyone with a good gold portfolio but for someone with a marriage function upon them will have it tough as prices have already started increasing.
Daxeshbhai Soni of Parasmani Jewellers told Vibes of India that an increase of 5 percent duty will have an adverse impact on the market as the black market of gold will increase as Indian prices will always be higher than that in the foreign market. He further added that people will especially go to Dubai to purchase Gold as there will be a significant difference between the prices.
Rohitbhai Chokshi of Ishwarlal Harjivandas Jewelers told Vibes of India that this increase by the central government has already given shock waves to the market as the price of gold has already started increasing. He further added that it will have a two-fold impact as prices will increase and instances of gold smuggling will increase with it.
“This in no way helps the central government as gold without bills becomes more lucrative and jewelers like us selling with a bill will be at a loss. We urge the Central Government to look into it,” said Rohitbhai Chokshi.
