India hikes import duty on gold, platinum by 50 percent

AGENCY
NEW DELHI: The Indian government on Monday hiked the import duty on gold and platinum to six per cent from four per cent with immediate effect, in a bid to control the ballooning current account deficit. It also decided to link the gold Exchange Traded Fund (ETF) with the gold deposit scheme offered by banks. Talking to reporters here, Economic Affairs Secretary Arvind Mayaram said the move was aimed at discouraging import of the precious metals. “The duties will be reviewed after some time if there is a moderation in the quantity of gold that is imported into the country,” Mayaram said. Gold is the major reason for the ballooning current account deficit in India, which is the largest importer of the yellow metal.
India’s current account deficit widened to a record high of 5.4 percent of Gross Domestic Product (GDP) during July-September quarter of 2012-13, according to the latest data of the Reserve Bank of India. Mayaram hoped that higher import duties would help in bridging the current account deficit as it will discourage imports of the precious metal.