Indian Government Raises Import Duty on Gold to 8%

The government of India on June 5, 2013 raised the import duty on gold to 8% from 6% in a bid to rein in import of the yellow metal and help curb a yawning current account deficit.

A finance ministry statement said the government had raised the basic customs duty on gold and platinum from 6% to 8% and the changes come into effect immediately. It said that the government had taken the measures after being satisfied that it was necessary to do so in public interest. This is the second time that the government has raised the import duty on the yellow metal in a desperate attempt to curb imports. In January, the government had raised the duty to 6% from 4%.

The government and the Reserve Bank of India (RBI) have taken several measures in the past few months to tame gold imports, which is partly blamed for the widening of the current account deficit (CAD). The CAD widened to a record 6.7% of gross domestic product in the December quarter. For the full financial year, it is expected to ease to 5% but way above the central bank's comfort range of 2.5% to 3%.