No immediate plan for more gold curbs - official

LONDON Wed Jan 30, 2013 10:44pm IST

A goldsmith holds finished gold bangles at a workshop in Kolkata January 16, 2013. REUTERS/Rupak De Chowdhur

A goldsmith holds finished gold bangles at a workshop in Kolkata January 16, 2013.

Credit: Reuters/Rupak De Chowdhur

Related Topics

LONDON (Reuters) - The government does not currently plan additional taxes or curbs on imports of gold as it waits to see the impact of recent tax hikes, a top finance ministry official told Reuters on Wednesday.

India, the world's largest importer of gold along with China, last week raised the import tax on refined gold by 2 percentage points to 6 percent and more than doubled duties on gold alloy, aiming to rein in a ballooning trade deficit.

Finance Minister Palaniappan Chidambaram was quoted by the Financial Times as saying this week that India was looking at "some other" steps to curb gold imports.

Asked if more tax hikes or import curbs are planned, Arvind Mayaram, economic affairs secretary at the finance ministry, said: "I don't think there is any plan as of now."

He added, "We are taking several measures. The Reserve Bank of India continuously reviews different scenarios, but there is no specific product that I can tell you about today. We are continuously working on different products."

The tax increases come on top of last year's move to double the gold import duty to 4 percent, but many analysts say the latest steps still will not significantly dent Indians' passion for gold.

The gold imports are a headache for the government, helping to push the current account deficit to a record high 5.4 percent of gross domestic product in the July-September quarter.

The government wants to link the gold ETF (exchange traded fund) schemes offered by mutual funds to the gold deposit schemes offered by banks to increase the availability of physical gold in the market.

The ETFs are estimated to hold some 40 tonnes of gold, which at present is lying in vaults, Mayaram said.

"We are saying ETFs should monetise part of their gold deposits ... even if you look at 20 percent that is 8 tonnes of gold ... that gold will come to the market without imports to meet domestic demand for gold."

Mayaram said it was too early to gauge the impact of the recent measures.

"Last year imports were $55 billion, and this year the projected estimate was $50 billion and that was before the (most recent hike)," he said. "So raising the tax (last year) from 2 percent to 4 percent already seems to have had an impact. So I believe there will be further impact this year."

(Reporting by Sujata Rao; editing by Jane Baird)

FILED UNDER:
  • Most Popular
  • Most Shared

Pending Reform

REUTERS SHOWCASE

Power Theft

Power Theft

India to invest $4 billion to tackle power theft  Full Article 

Debt Funds

Debt Funds

India monitors foreign flows into debt funds, may tighten rules  Full Article 

Bulgari Back in India

Bulgari Back in India

CEO: we shouldn’t have left India so we’re back  Full Article 

 Hindu "Modi-fication"

Hindu "Modi-fication"

Fears grow about Hindu "Modi-fication" of education  Full Article 

Weak Credit

Weak Credit

Hard to hit tax revenue target, credit weak - Jaitley  Full Article 

China Rate Cut

China Rate Cut

China surprises with interest rate cut to spur growth  Full Article 

Gold Imports

Gold Imports

RBI cautious on response to gold import surge  Full Article 

Economic Corridor

Economic Corridor

China commits $45.6 billion for economic corridor with Pakistan  Full Article 

Overseas Funds

Overseas Funds

RBI says overseas borrowed funds can be parked with banks in India  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage