Gold Imports in India contribute a significant value to the economy. There are import duties that the Indian government imposes on gold. These duties were increased to decrease the gold import as India imports tons of gold for personal use.
Gold prices in India shot up immediately as soon as the government announced the hike. This hike has drastically impacted the gold importers who trade with gold, and around 100s of tons of gold were imported into India in a month. This created a troublesome situation for the Indian economy as most of the gold was for personal consumption. Therefore, this hike is to balance the import of yellow stone.
Why did the government increase the Gold Import Duty?
India is a large importer of gold for personal consumption. For ages, gold has been an option for investment for Indians and is considered a safe investment option to tackle the inflation situation. However, as the imports are increasing for gold, it is affecting the value of the Indian currency. Therefore, the government is taking measures to balance the value of the Indian currency in the market.
According to the official data, gold imports in India increased by 790% in a month. Therefore, to decrease these imports, the government was bound to increase the import duty to have a balanced approach. This increase and decrease in gold imports will ultimately stabilize the Indian currency.
Why should Gold Importers worry about the hike in Import Duty?
As the government increases the import duty from 10% to 15%, various sectors will have a massive impact on this hike. One such impact will be on the gold importers in India.
- As per estimates, the hike in import duty will significantly impact Indian imports as importers will find it costlier to import gold.
- There will be an increase in the cost of making jewelry for importers and makers as the base cost for gold will increase.
- India’s gold rush will decrease with this gold import duty hike. Therefore, the demand for gold may decrease in the Indian market, ultimately impacting the importers. This decrease in demand will indirectly impact importers by reducing their imports.
However, according to some experts, it is said that the gold importers do not have much impact because this increase in import duty will only increase the price but will not reduce the imports. As per the behavior of consumers in the Indian market, people are motivated by increasing the gold price that they must buy and save gold as the price of gold is increasing. This is also a point that will affect the gold importers.
iiiEM is an Institute for Export-Import Management Program. Learn with Award-Winning Faculty, the highest experience in EXIM, and Dedicated doubt-solving. Professional Certificate Classroom Course with Practical. PPTs, and ebooks provided. Best Faculty for EXIM. We provide practical knowledge of Export-Import education.
So, these are distinct possibilities that can impact the Indian market. As the yellow stone is also preferable in India for ages, consumption of these precious stones has a massive role in shaping the Indian economy. Therefore, the government takes measures to maintain the price structure of these precious stones. However, the increase in gold import duty will impact the prices of gold and increase the Indian market.