Chairman of All India Gems and Jewelry Domestic Council, Ananthan Padmanabhan informed that the tax rise may depress buyers and slim demand in the physical market by 10% this year, from 760 tons in 2018.
The import duty increased for the 1st time since 2013 to 12.5 % from 10 %. According to Padmanabhan, “This is going to encourage a lot of smuggling.”
Padmanabhan said that, “This is very unsatisfactory, & we were expecting a decrease in customs duty and this came as a surprise and a shock.”
The current gap between Indian and international gold prices will expand by 2.5 % to 15.5 %. The high duties have encouraged a sequence of smuggling, including attempts to bring in bullion via planes and trains. Domestic rates have traced a flow in foreign spot gold and further rises would result in risky demand during festival and peak wedding season running from the month of August to December.