The Government of India has reduced the import prices on the basis of Sleep and some edible oils. The government revises the base import prices for edible oils, gold and silver every fortnight, and the prices are used to calculate the amount of tax to be paid to an importer. India is the world’s largest importer of edible oil, while meeting most of its domestic gold requirement through imports.
Barring gold and silver, the base price of all commodities is in dollars per tonne. Gold tariff is in dollars per 10 grams. The base tariff value on gold has been reduced to $549 per 10 grams from $557 per 10 grams earlier.
Gold is an international commodity and is priced in US dollars. Therefore, volatility in the prices of the yellow metal in India is closely linked to the greenback and import duties.
In July, the government raised its basic import duty on gold from 7.5% to 12.5%, triggering a sharp jump in domestic prices versus global rates. India meets most of its gold demand through imports.
In India, gold prices in India hit 6-month low as MCX futures fell 0.16% 49,231 per 10 grams. gold fell close 1,500 so far this week, up from Monday’s high.
In global markets, the yellow metal was struggling near a two-year low amid a rally in the US dollar and prospects of an aggressive US rate hike. Spot gold was at $1,664.48 an ounce and is down 3% so far this week.
“In the fast approaching festive season, the demand for gold and edible oil is expected to move north. India will have to import more of these items as compared to normal days due to increased demand for the precious metal and edible oil. Therefore, the Government of India’s move to cut the base import price of gold and some edible oils is aimed at providing relief to the domestic consumers of these commodities. This move is significant as the countries from where we import edible oils may increase their export value due to the emerging demand-supply constraints following rising import orders from India,” said Anuj Gupta, Vice President – at IIFL Securities Research said.
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