Indian government imposes new bullion tariffs as India battles rising import bills
The Indian government has imposed a 15% import duty on gold and silver, days after Narendra Modi urged citizens to avoid non-essential gold purchases. The move is aimed at protecting forex reserves and reducing pressure on the current account deficit amid global economic uncertainty.
Government imposes 15 per cent import duty on gold, silver
The Union government has imposed a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC) on imports of precious metals like gold and silver. This comes after Prime Minister Narendra Modi on Sunday urged people to pause non-essential gold purchases for the next year as part of an austerity appeal. In a late-night order, the Finance Ministry revised customs duty rates on gold, silver and other precious metals, signalling its more than an appeal but a policy change.
Custom duty on platinum and other precious metals
The Finance Ministry notification has also revised customs duty rates on jewellery findings, platinum and precious metal-linked industrial imports. Jewellery findings - small components such as hooks, clasps, clamps, pins and screw backs used in manufacturing - will now attract 5 per cent customs duty in the case of gold and silver, while platinum findings will face a 5.4 per cent levy.
No new bullion tariffs from key markets
Unfortunately, India is the only country to impose bullion tariffs for a financial shield. China, the world's other massive gold consumer, has kept its existing import structures intact. It imposes standard customs duties on precious metals and jewellery imports depending on the item type and country of origin. Turkey, despite having serious currency weakness, has not imposed any bullion tariffs. While the US implemented broad, sweeping baseline tariffs on general goods imported from multiple countries, it did not create an isolated or specific tariff targeting precious metal bullion imports. India is alone in this because it imports the majority of its gold from outside. Now, as the rupee slides, import bills increase as well and raise the Current Account Deficit. The Indian Government wants to save foreign exchange resources, which should be prioritised for essential imports such as crude oil, fertilisers, and industrial raw materials.
Countries that implemented nationalised austerity measures
China, Pakistan, Sri Lanka, Vietnam and the Philippines have implemented severe austerity measures. China ordered domestic oil refineries to completely halt fuel exports to lock down internal fuel security. Pakistan enforced a 50 per cent cut in fuel allowance for all official vehicles and imposed four-day workweeks. Banned all government luxury purchases and non-essential foreign travel. A similar consumption break was imposed in Sri Lanka, Vietnam and the Philippines. The closure of vital naval choke points like the Strait of Hormuz has forced these non-combatant nations into survival mode.
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