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Curbs on gold to stay

Yellow fever

New Delhi, Jan. 7: The finance ministry is unwilling to give in to the pleas by jewellers and the commerce ministry to relax the 10-per-cent duty on gold imports, which has led to an improvement in the current account deficit but encouraged smuggling.

Even within the finance ministry, there are differences: the economic affairs department, which is adamant on this issue, is at odds with the revenue department, which maintains that the curbs have started to prove counter-productive given the rise in smuggling.

Officials said the commerce ministry had sought a small cut in import duty in the next budget.

The higher duty has helped to curb India’s appetite for bullion. Gold and silver imports in November dipped over 80 per cent to $1.05 billion from $5.4 billion in the same period last year, shrinking the trade deficit to $9.21 billion, the second lowest for a month this fiscal. However, there are reports that gold smuggling has gone up.

Though imports have declined, smuggling and legal purchases by NRIs acting as couriers for jewellers have increased.

Newswires quoted department of economic affairs secretary Arvind Mayaram as stating that, “Our point is that we need to keep CAD (current account deficit) low. We cannot afford to let it go and therefore, at least for this fiscal, we should not tamper with the what the regime is.”

The economic affairs department maintains that despite a rise in seizures, smuggling is still within manageable limits and the revenue department should concentrate on better policing of the borders and ports.

 
 
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