Cut in gold import tariff will not impact domestic market, say traders

Himanshu Vatsa | The Dollar Business

Falling gold price in the global market has prompted the Indian government to reduce the import tariff on the precious metal for the fourth time in a row. But the move will hardly have any impact on the volatile domestic market condition, say traders. According to analysts, the continuous fall in the yellow metal’s price across the globe is likely to trigger a rise in demand in the domestic market because more and more people will rush to buy gold. Traders say that sudden increase in demand may push up import. But, inbound shipments from overseas can be checked if the gold monetisation scheme comes into effect. “Reducing import tariff will not have much impact on the market condition. Falling prices will naturally shoot demand because people will tend to buy more. If the government implements the gold monetisation scheme, the supply will increase domestically and the import will come down,” Jagat Singh Chauhan, Director of Jindal Bullion Limited, told The Dollar Business. The Finance Ministry announced a revised import tariff—the base value to determine customs duty—for gold on Thursday, a week ahead of the routine revision of import tariff. According to the fresh notification issued by the Central Board of Excise and Customs (CBEC), the tariff value for gold has been fixed at $354 per 10 gram against $376 fixed on July 15. The tariff was $385 per 10 gram of imported gold a month ago. Usually, the government revises import tariff on gold, silver and other items every fortnight to keep a check on import and curb under-invoicing by importers. The price of gold in the international market has reduced by more than 5% in the past one week to around $1080 per ounce. And analysts forecast further downfall in the coming weeks. In India, the gold rate is hovering around Rs. 25,000 per 10 gram, the price level of 2010-11.      

July 25, 2015 | 3:55 pm IST.