Govt hikes duty on gold, silver from 6% to 15% in bid to lower demand

NEW DELHI: Days after PM Narendra Modi’s appeal to reduce gold purchases, the finance ministry on Wednesday raised customs duty on the yellow metal and silver to 15% from 6% in a bid to lower the demand for precious metals.The move pushed up domestic spot market for gold by Rs 9,000-10,000 to about Rs 1.6 lakh per 10 grams, while silver was up about Rs 18,000-19,000 a kg to around Rs 2.9 lakh. Prices of exchange traded funds (ETFs) on these metals also showed a strong uptick on bourses. Duty on platinum was also hiked from 6.4% to 15.4%.

Jewellers are looking towards a moderation in demand and are seeking to devise ways, such as promoting exchange of old ornaments, to keep businesses going.India is the second largest buyer of gold, a favourite with households, which use jewellery and coins to park surplus cash, but it usually ends up locked up in vaults. It is the second largest commodity import after crude and the value of its imports shot up 24% to $72 billion during the last fiscal year due to higher prices, even as quantity was down 5% to 721 tonnes, indicating some moderation in demand.In contrast, imports of silver, which also has industrial use, soared 2.5 times to over $12 billion while the quantity shipped rose 42% to 7,335 tonnes, according to commerce department data. While in the past, too, govts have sought to reduce demand for gold, they have made limited headway.