Gold prices to jump by Rs 600 after duty hike
New Delhi: Gold will become costlier by about Rs 600 per 10 grams following government's decision to hike customs duty on the precious metal, according to jewellers and bullion traders.
Gold price is ruling at Rs 29,825 per 10 gram in the national capital.
Opposing the move, industry said the hike in import duty would only help the government's exchequer and not lead to fall in import rather would encourage smuggling.
India, the largest gold consumer in the world, imported 860 tonnes of gold in 2012. In the first three months of 2013 calendar year, import stood at 215 tonnes. Gold import stood at about 335 tonnes in the April-June quarter.
"The domestic prices will up by Rs 600-700 per ten grams due to increase in import duty. This would also lead to shortage of raw material for jewellers," All India Gems and Jewellery Trade Federation Chairman Haresh Soni said.
He said that raising import duty of gold is not the right solution for addressing the CAD situation. "The imports will not come down, rather it will encourage smuggling to flourish. Overall, industry will be badly affected."
The domestic artisans would be affected as there will be more import of finished products with gap in import duty of finished and raw material narrowing, he added.
The federation's immediate past chairman Bachhraj Bamalwa termed the hike in import duty as an "excuse to generate revenue".
"This will not lead to reduction in imports. In turn, the move will encourage illegal means to bring gold into the country," Bamalwa said, adding that the government is not concerned about the artisans.
Gold imports would reduce to about 750 tonnes in 2013 because of restrictions imposed by the government, he added.
Delhi-based PC Jewellers Managing Director Balram Garg said the gold prices would rise by about Rs 600 per 10 gram.
Commenting on the development, Bombay Bullion Association Spokesperson Kumar Jain said: "In July, when the duty was 8 per cent, the imports were around 47 tonne. Raising the duty is no solution to restrict gold imports as demand will continue be there".
Gold jewellery is likely to become costlier by Rs 600 per 10 grams after the increase in duty, Jain said.