The government has hiked the import tariff on gold to $428 per 10 gram from $411 and silver to $688 per kg from $632 per kg, in line with global rates of the precious metals. Global precious metal prices such as gold have firmed up due to the escalating violence in Iraq and Ukraine that has bolstered demand for the precious metal. In London, spot gold prices had hit a two-month high of $1,325.90 per ounce last week.
Tariff value or the base price is set to determine the customs duty on the precious metal and to prevent under invoicing. The government revises import tariff value on a fortnightly basis taking into account the volatility in global metal prices.
Gold is the second largest import item for India after crude oil. The government had taken various measures like high customs duty of 10% and 80/20 rule to curb gold shipments to check country’s widening current account deficit (CAD). Meanwhile, the government’s measures to contain the gold imports yielded results as gold and silver imports fell by 40.02% to $33.46 billion in FY14 due to these stern government’s norms. Low gold imports also helped India to contain current account deficit (CAD) at 1.7 percent of GDP or $32.4 billion in FY 14 as compared to $87.8 billion, or 4.7 percent of GDP in FY13.