September 24, 2018 / 9:31 AM / in 2 months

India eyes higher import duties on key items, but will spare gold: official

A man counts currency notes inside a shop in Mumbai, August 13, 2018. REUTERS/Francis Mascarenhas/Files

NEW DELHI (Reuters) - India is likely to increase import duties on precious stones, certain types of steel and electronics but will spare gold to prevent smuggling, a finance ministry official said on Monday.

The official, who declined to be named, told reporters the main reason for the planned increase in duties is to curb an inflow of items that normally move between China and the United States, but could be redirected because of the tariffs imposed by the two countries.

India is also trying to curb imports of “non-essential” items to support the rupee, Asia’s worst performing currency.

The rupee has fallen around 12 percent this year, forcing Prime Minister Narendra Modi’s government to scramble for steps to arrest the fall. Indians generally see a strong rupee as a matter of pride.

News agency NewsRise reported on Monday that the finance ministry was considering a proposal to float a special gold deposit programme to cut imports of the metal by recycling the metal inside the country.

India is the world’s second-biggest gold buyer, after China, and spent $3.64 billion on such imports last month.

Indian oil refiners, meanwhile, could cut back their imports and rely more on cheaper crude already stored in inventories to limit the outflow of dollars, Reuters reported on Monday.

The government is also planning to ask state oil firms to lock in their crude futures purchase prices, anticipating a spike when U.S. sanctions on Iran are reimposed in November.

India’s steel ministry has proposed increasing the effective import duty on some steel products to 15 percent from current rates ranging from 5 percent to 12.5 percent.

Reporting by Neha Dasgupta; Editing by Richard Borsuk

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