New Delhi The commerce ministry is discussing reducing import duty on gold to curb illegal shipments, according to people familiar with the matter.
The world’s second-biggest consumer of the precious metal, almost all of which it buys from abroad, has asked the finance ministry to consider reducing tariffs from 12.5% to about 10%, two of the people said. Asked not to be identified as the discussions are private. He said it was not yet clear whether the recommendation would be accepted and a decision could be announced on or before the budget presentation early next year.
The case presents a dilemma for Finance Minister Nirmala Sitharaman, who needs to keep imports down to control a growing trade deficit, but smuggling deprives the government of much-needed revenue. The country’s purchases declined after his administration raised tariffs in July.
A finance ministry spokeswoman declined to comment and a commerce ministry representative did not respond to an email and text message seeking comment.
Following the tariff hike, India’s gold imports fell 23% in July-September compared to the same period a year earlier, according to data from the World Gold Council.
According to the All India Gems and Jewelery Domestic Council, the bullion industry is demanding a reversal of the tax hike made in July and a reduction in the Goods and Services Tax (GST) from the current 3% to 1.25%.
Ashish Pethe, president of the Mumbai-based trade group, said, “High import duty is creating problems for the domestic industry as it increases the arrival of non-official goods and benefits illegal trade.” Anywhere between 4%-6% where the government will also get enough revenue and there will be no illegal trading.”
catch all business News, market news, today’s fresh news events and breaking news Update on Live Mint. download mint news app To get daily market updates.