World's largest gold consumer India reiterated it's commitment to cut gold imports by planning it to make expensive.
NEW DELHI(BullionStreet): World's largest gold consumer India reiterated it’s commitment to cut gold imports by planning it to make expensive.
Country's finance minister P Chidambaram said “demand for gold must be moderated... We may be left with no choice but to make it more expensive to import gold.
The matter is under government consideration," Gold import is a major constituent of India's rising Current Account Deficit (CAD).
The CAD, which represents the difference between exports and imports after considering cash remittances and payment, widened to a record high of 5.4 percent.
The government is considering more steps to reduce gold import by making it more expensive, he said.
In value terms, gold imports stood at $20.2 billion in the April-September period of the current fiscal, a decline of 30.3 per cent over the corresponding period a year ago.
For the entire 2011-12 fiscal, gold imports stood at $56.2 billion. The decline was mainly on account of increase in customs duty on gold imports by government in January and March 2012.
India doubled the basic customs duty on standard gold bars to four per cent and on non-standard gold to 10 per cent.
The country also imposed one per cent excise duty on unbranded jewellery, which was subsequently rolled back after protest from jewellers across the country.
Currently, the government is also making efforts to channelise investor money into equities and other financial instruments to reduce demand for the yellow metal.
The CAD had risen to 4.2 per cent of GDP in the 2011-12 fiscal on account of high gold import and increasing prices of crude oil in international markets India's gold imports showed some moderation in July-September, with bullion's share of total imports declining to 8.9 percent compared to 11.6 percent in same quarter in previous year.
However, analysts said gold imports may have risen in the October-December quarter which included the Diwali and marriage season, and imports may remain high as real returns from domestic deposits remain low.