Friday, June 7th 11:26 AM IST

WGC raises concern over India Gold duty hike

# WGC  # India gold  # China gold  # gold demand  

The hike is yet another step to limit supply of gold by making it more expensive. Almost all of India's gold demand is met through imports and this hike will increase the cost of gold for retail customers," he added.

NEW DELHI(BullionStreet): Expressing concern over India’s decision to hike import duty of gold for the second time this year,WGC India said.

In a statement, WGC India Managing Director Somasundaram PR said the move would only result in price increases for the precious metal, while warning that new curbs on supply are not likely to be successful long-term as it would lead to a rise in smuggling and other unauthorized channels of supply to meet demand.

The hike is yet another step to limit supply of gold by making it more expensive. Almost all of India's gold demand is met through imports and this hike will increase the cost of gold for retail customers," he added.

“The nature of demand at the retail level is such that restricting supply will not be effective in the long-run and is likely to lead to non-transparent price premiums in the market and demand being met increasingly through unauthorised channels which will not be positive for either the economy or for society. Somasundaram said.

India hiked customs duty on gold to 8 per cent from 6 per cent earlier hoping that it will curb gold imports which apart from oil is the only the other commodity leading to increased Current Account Deficit or CAD.

This is the second hike in the duty in six months. In May, gold imports touched 162 tonnes. In terms of value, gold imports in April and May touched a staggering $15 billion.

According to WGC data, India imported 860 tonnes of gold in 2012 calendar year. During January-March of 2013, the country imported 215 tonnes of precious metal.

Somasundaram acknowledged that large CAD is unsustainable and needs to be checked but said that there were number of factors which influence the current account deficit in India and gold is one of them.

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