Page 48 - Bullion World Volume 02 Issue 08 August 2022

INDIA news
Bullion World | Volume 2 | Issue 08 | August 2022

Import duty hike: action may have been triggered by the drop in India’s forex reserves over

No gain from the past few months—$16.7 billion since March. Anybody bypassing the
official channel (i.e., smuggling gold) stands to make a 15.85% return for
raising gold levies a one-time trade over a few days. Even high-flying hedge funds would be
hard-pressed to match such a return. The government has just raised the
Import duty hike: incentive for gold smuggling, ignoring India’s experience from the 1970s

and more recent lessons from immediate neighbour Sri Lanka.
No gain from
raising gold levies The increase in customs duty on gold is an attempt to reduce the outflow
of foreign exchange. The action is understandable, as India’s trade deficit
has increased to $25.6 billion for June 2022 and $70.3 billion for Apr-June
July 1, 2022, the Central Board of Excise hiked the 2022. Meanwhile, the rupee has also weakened by over 5% since 2022 to
import duty on gold from 7.5% to 12.5%. Gold also Rs 79/USD. Indians are amongst the most avid consumers of gold. Gold
attracts GST and other levies, so the effective tax is one of the few ways to preserve wealth across generations; unlike land,
on gold adds up to just over 18% of its value. This it is portable.
Source: https://www.financialexpress.com

India's decision
to hike import

duty on gold

to make prices

more attractive Gold import duty will promote
in GCC, says grey market: WGC India.

Malabar Gold The sharp increase in gold import duty will again incentivise gold smuggling and
push the trade to deal with the grey market. Though gold prices are falling globally, it
official: has remained steady in India due to rupee depreciation against the dollar. The price
difference between legal and smuggled commodities will significantly boost jewellers
to source gold illegally.
The recent announcement by the Indian
government to raise import duty to Source: https://www.thehindubusinessline.com
12.5% from 7.5% is expected to make
gold more expensive across India.
This hike has increased the gold price
difference between the GCC and India. SBI crosses the
The gold price in the GCC will get more
attractive than in India, with a saving Rs 1-trillion-mark
of 12-15%. The weakening rupee will
further increase the gold rate in India. in gold loans
Source: https://www.gulf-times.com
In the first quarter of FY23, the bank has seen decent traction in the segment and
much better growth compared to what it saw during the corresponding period in
the past. At the end of March 2022, the value of SBI’s outstanding gold loans to
individuals stood at Rs 23,063 crore. The Rs 1-trillion portfolio, therefore, likely
includes agri- loans backed by gold. The value of total outstanding gold loans to
individuals in the banking sector as of May 20, 2022, stood at Rs 73,752 crore.

Source: https://www.financialexpress.com

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