The government has hiked the import tariff value of gold to $445 per 10 grams from $433, in line with global rates of the precious metals. Tariff value or the base price is set to determine the customs duty on the precious metals and to prevent under invoicing. However, the import tariff value of silver has been reduced to $694 per kg from $699 per kg earlier.
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 have started yielding results as imports of gold and silver declined by 70% to $1.6 billion during first eleven months of current fiscal from a year earlier. India’s gold import is likely to come down to around 550 tonnes in FY14 from 845 tonnes in FY13 due to these restrictions.
Shrinking gold imports also helped to contain the current account deficit (CAD) to $31.1 billion (2.3% of GDP) during the April-December’FY14 as compared to $69.8 billion (5.2% of GDP) reported in the same period of previous fiscal year.