Increasing the import duty on gold alone will not help bridge the country's trade deficit, Commerce Minister Anand Sharma said on Wednesday even as Finance Ministry and RBI have been taking steps to discourage imports of the precious metal.
Mumbai: Increasing the import duty on gold alone will not help bridge the country's trade deficit, Commerce Minister Anand Sharma said on Wednesday even as Finance Ministry and RBI have been taking steps to discourage imports of the precious metal.
"I don't think increasing the import duty on gold will help bridge trade deficit, as oil and gas import bills are much higher and with their international prices shooting up of late, it will only put more pressure on the trade gap front," Sharma told reporters on the sidelines of the Nasscom national summit here.
Trade gap is the difference between imports and exports.
"I don't think there is trade account pressure that is substantially getting altered only due to gold imports," he added.
However, the minister said that high gold imports have been a matter of concern.
At about USD 60 billion, gold imports was the second largest component in import bill last fiscal when inward shipments touched a record USD 489 billion while exports netted only USD 306 billion.
The government has increased import duty on gold by manifold this fiscal as the current account deficit has hit a record high at 4.2 percent in FY'12 and a historic 5.4 percent in the second quarter of this fiscal.
Last month, the government hiked the import duty on gold from 4 to 6 percent.
Last week, an RBI report has called for a slew of measures to contain gold imports, basing its argument mostly on the gold import component in the CAD basket, including setting a gold bank.
CAD occurs when country's total imports and transfers are higher than its total exports and transfers.
Trade gap rose to USD 167.16 billion in the first 10 months of the fiscal as out of the ten months only in two months exported recorded growth.
In January, it grew at a paltry 0.8 percent to USD 25.58 billion, while imports jumped 6.12 percent to USD 45.5 billion, widening the trade deficit to USD 20 billion, which is the second highest ever in a given month.