India, the world’s largest bullion buyer, increased taxes on gold imports to reduce a record current-account deficit and moderate demand for the precious metal that’s rallied for 12 straight years.
The duty on gold and platinum imports was raised to 6 percent immediately from 4 percent, Economic Affairs Secretary Arvind Mayaram told reporters in New Delhi yesterday. A levy on gold ore, concentrate and so-called dore bars for refining will be doubled to 4 percent, and an excise tax on refined gold will climb to 5 percent from 3 percent, the customs said on its website. The tariff will be reviewed if imports moderate, Mayaram said.
Increased taxes may reduce demand in Asia’s third-largest economy after prices jumped 7.1 percent in 2012 as investors and central banks boosted purchases. About 80 percent of India’s current-account deficit, the broadest measure of trade, tracking goods, services and investment income, is due to gold imports, according to the Reserve Bank of India.
“Consumption and imports will fall definitely,” Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation, said in a phone interview from Kolkata. “This will also help the government reduce the current-account deficit.”
Gold for immediate delivery climbed as much as 0.3 percent to $1,694.88 an ounce in London today after the Bank of Japan set a 2 percent inflation target and shifted to Federal Reserve- style open-ended asset purchases to end two decades of deflation. It gained 0.3 percent yesterday. Platinum gained 9.5 percent to $1,685.49 an ounce since the beginning of January.
Read More at Bloomberg . By Siddhartha Singh.