New Delhi, March 21: The commerce ministry has asked the finance ministry to review gold import duty norms as the curbs have increased smuggling of the yellow metal.
“We have written to the finance ministry to lower the duty and have been working with them towards the possibility of a relaxation,” a senior official said.
With the Reserve Bank of India allowing more banks to import gold, hopes are pinned on the government to revisit the import duty on the yellow metal, which was hiked to 10 per cent from 4 per cent to contain the ballooning current account deficit (CAD).
Sources said the government was working on a gradual easing of the duty to prevent a sudden surge in imports.
Earlier this month, finance minister P. Chidambaram had said the gold import duty could be revisited only after the final CAD numbers were out.
The government had imposed restrictions on the import of the yellow metal to contain CAD, which touched a record high of $88.2 billion in 2012-13.
The current account deficit, the final figures of which are expected in the first week of June, for the current financial year is expected to narrow to $45 billion.
Gold imports, which peaked at 162 tonnes in May 2013, came down to 19.3 tonnes in November after the government hiked the import duty thrice last year.
The CAD, which is the difference between the inflow and outflow of foreign currency, narrowed to $31.1 billion (2.3 per cent of GDP) in April-December of 2013 from $69.8 billion (5.2 per cent of GDP) in the corresponding period of 2012, according to the latest RBI data.
Although the model code of conduct is in force, officials said the poll panel would have to be informed about the changes in the duty structure before a notification was issued as it was an administrative step and not a policy decision.
The Opposition, Bharatiya Janata Party, has opposed the import restrictions, while its prime ministerial candidate Narendra Modi has said any action on gold should take into consideration the interests of the public and traders and not just economics and policy.
UPA chairperson Sonia Gandhi had also asked the commerce ministry “to look into the matter” following a request from gems and jewellery exporters to ease the restrictions.
Gems and jewellery exports had dipped 4.18 per cent to $3.59 billion in February.