India cuts gold’s import tax

In a move that contradicts India’s latest efforts to control gold imports, the government announced Monday it has reduced gold’s import tariff to US$458 from $461 per 10 grams, reported news agency PTI.

The measure was taken by Central Board of Excise and Customs after gold prices extended losses for the fourth straight day.

The Reserve Bank of India (RBI) has been imposing lately several restrictions on gold imports in an attempt to curb demand for the precious metal and reduce the country’s current account deficit.

The Asian nation’s current account deficit is nearly 5% and gold is a major driver behind that figure, second only to oil.

Last month, RBI banned the sale of gold coins, medallions and dores without a licence from the foreign trade office. The measure came only a day after the government raised the import tax on the yellow metal for the third time this year, from 8% to 10%.

Based on market estimates, Indian households are hoarding close to 20,000 tonnes of gold worth some $1 trillion, representing 50% of the country’s GDP.

India is the world’s largest gold importer, bringing in about 963 tonnes of the precious metal each year, according to China.org.

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