The government on Monday reduced the import tariff value on gold and silver to $408 per 10 grams and $617 per kg respectively amid price of the yellow metal falling in the international market.
Gold prices fell to the lowest in almost four months in light of stronger equities. The yellow metal fell 0.4 per cent to $1,245.20 an ounce after reaching $1,241.11, the lowest since February 3. Silver also fell 0.3 per cent to $18.75 an ounce.
The tariff value on imported gold stood at $424 per 10 grams and silver at $650 per kg in May. The import tariff value is revised on a fortnightly basis after factoring in the global volatility in price.
According to a notification issued by the Central Board of Excise and Customs (CBEC), “gold, in any form, in respect of which the benefit…is availed, will be at $408 per 10 gram, silver at $617 per kg”.
Last month, rating agency India Ratings had said that gold prices in the domestic market could lower in the range of Rs 25,500 per 10 gram to Rs 27,500 per 10 gram in FY15, due to cooling international gold prices and economic recovery in the US and euro zone. This, the agency report said, would strengthen the US dollar that “has historically a negative co-relation with gold.” Domestic gold rates in the city touched 11-month low at Rs 27,400 per 10 grams on Monday.
Last year, in order to check gold imports to rein in current account deficit, the government and the RBI had put in sharp controls, bringing down the country’s CAD to 1.7 per cent of GDP ($32.4 billion) in FY14 from 4.7 per cent ($87.8 billion) in FY13. While the government had raised the import duty to 10 per cent on the metal, RBI made it mandatory for traders to export 20 per cent of the imported gold. After petroleum, gold is the second largest import item in the country.